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Strategy Proof Uniform Effort Sharing Schemes For Transfrontier Pollution Problems

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  • Johan Eyckmans

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Abstract

Uniform effort sharing rules for transfrontier pollution problems, like the popular equal percentage reduction arrangement, do not result in a cost efficient allocation of emission abatement efforts. In addition, they may violate voluntary participation constraints if the uniform effort level is decided upon by means of ordinary majority vote. In contrast to ordinary majority vote, I consider in this paper the so-called conservative mechanism by Moulin (1994) which picks the smallest revealed effort level in stead of the median. The conservative mechanism always respects a weak participation constraint. Moreover, it is coalitionally strategy proof meaning that no individual player, or group of players, can achieve a better outcome by misrepresenting its preferences for environmental quality. In order to remedy the cost inefficiency of the equal percentage arrangements, I propose to apply the conservative mechanism to the choice of a uniform emission tax rate. Simulations for the greenhouse effect indicate that the latter mechanism does considerably better than the traditional equal percentage arrangement. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • Johan Eyckmans, 1999. "Strategy Proof Uniform Effort Sharing Schemes For Transfrontier Pollution Problems," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(2), pages 165-189, September.
  • Handle: RePEc:kap:enreec:v:14:y:1999:i:2:p:165-189
    DOI: 10.1023/A:1008339224595
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    References listed on IDEAS

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    1. Nordhaus, William D, 1991. "To Slow or Not to Slow: The Economics of the Greenhouse Effect," Economic Journal, Royal Economic Society, vol. 101(407), pages 920-937, July.
    2. Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
    3. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 379-401.
    4. H. Moulin, 1980. "On strategy-proofness and single peakedness," Public Choice, Springer, vol. 35(4), pages 437-455, January.
    5. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1992. "The Costs of Reducing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 115, OECD Publishing.
    6. Satterthwaite, Mark Allen, 1975. "Strategy-proofness and Arrow's conditions: Existence and correspondence theorems for voting procedures and social welfare functions," Journal of Economic Theory, Elsevier, vol. 10(2), pages 187-217, April.
    7. Hervé Moulin, 1994. "Serial Cost-Sharing of Excludable Public Goods," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 305-325.
    8. Gibbard, Allan, 1973. "Manipulation of Voting Schemes: A General Result," Econometrica, Econometric Society, vol. 41(4), pages 587-601, July.
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    Citations

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    Cited by:

    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    2. Juan-Carlos Altamirano-Cabrera & Michael Finus & Rob Dellink, 2008. "Do Abatement Quotas Lead To More Successful Climate Coalitions?," Manchester School, University of Manchester, vol. 76(1), pages 104-129, January.
    3. Anriquez, Gustavo, 2002. "Trade And The Environment: An Economic Literature Survey," Working Papers 28598, University of Maryland, Department of Agricultural and Resource Economics.
    4. Hans-Peter Weikard & Rob Dellink, 2014. "Sticks and carrots for the design of international climate agreements with renegotiations," Annals of Operations Research, Springer, vol. 220(1), pages 49-68, September.
    5. Peter Kennedy, 2016. "Cooperative Action on Greenhouse Gas Emissions and the Distribution of Global Output and damage," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 147-166, January.
    6. Di Maria, Corrado & Smulders, Sjak & van der Werf, Edwin, 2012. "Absolute abundance and relative scarcity: Environmental policy with implementation lags," Ecological Economics, Elsevier, vol. 74(C), pages 104-119.
    7. Eyckmans, Johan & Hagem, Cathrine, 2011. "The European Union's potential for strategic emissions trading through permit sales contracts," Resource and Energy Economics, Elsevier, vol. 33(1), pages 247-267, January.
    8. Basak Bayramoglu & Jean-François Jacques, 2015. "International Environmental Agreements: The Case of Costly Monetary Transfers," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 745-767, December.
    9. Alfred Endres & Bianca Rundshagen, 2013. "Incentives to Diffuse Advanced Abatement Technology Under the Formation of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 177-210, October.
    10. Urs Steiner Brandt, 2002. "Actions Prior to Entering an International Environmental Agreement," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 695-695, December.
    11. Urs Brandt, 2003. "Are Uniform Solutions Focal? – The Case of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(3), pages 357-376, July.

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