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The Impact of Equity-preferences on the Stability of International Environmental Agreements

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  • Andreas Lange

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Abstract

This paper uses a coalition formation model to explore how equity considerations affect countries’ cooperation on global environmental issues, e.g. on climate change. When developing countries are exempted from obligations to reduce their emissions, I find that opening them for abatement projects financed by industrialized countries changes the incentives to cooperate in a way which can increase emissions and decrease welfare. Equity- concerns in industrialized countries regarding the difference between their per capita emission levels and those of developing countries lead to increased abatement but do not qualitatively change the incentives to cooperate. Inequality-aversion with respect to differences to abatement targets across industrialized countries generally induces larger coalition sizes and stricter abatement. Here, the inclusion of developing countries improves upon the prospects of cooperation. Copyright Springer 2006

Suggested Citation

  • Andreas Lange, 2006. "The Impact of Equity-preferences on the Stability of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(2), pages 247-267, June.
  • Handle: RePEc:kap:enreec:v:34:y:2006:i:2:p:247-267
    DOI: 10.1007/s10640-005-0006-4
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    References listed on IDEAS

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    1. Böhringer, Christoph & Helm, Carsten, 2001. "Fair division with general equilibrium effects and international climate politics," ZEW Discussion Papers 01-67, ZEW - Leibniz Centre for European Economic Research.
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    Cited by:

    1. Nyborg, Karine, 2018. "Reciprocal climate negotiators," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 707-725.
    2. David M. McEvoy & John K. Stranlund, 2016. "Inequality Aversion and Coalition Formation," Working Papers 16-09, Department of Economics, Appalachian State University.
    3. Doruk Iris & Alessandro Tavoni, 2016. "Tipping Points and Loss Aversion in International Environmental Agreements," Working Papers 1603, Research Institute for Market Economy, Sogang University.
    4. Andreas Schmidt & Mike Schäfer, 2015. "Constructions of climate justice in German, Indian and US media," Climatic Change, Springer, vol. 133(3), pages 535-549, December.
    5. Gregor Schwerhoff, 2016. "The economics of leadership in climate change mitigation," Climate Policy, Taylor & Francis Journals, vol. 16(2), pages 196-214, March.
    6. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, August.
    7. Gregor Schwerhoff, 2013. "Leadership and International Climate Cooperation," Working Papers 2013.97, Fondazione Eni Enrico Mattei.
    8. Andries Hof & Michel Elzen & Detlef Vuuren, 2009. "Environmental effectiveness and economic consequences of fragmented versus universal regimes: what can we learn from model studies?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(1), pages 39-62, February.
    9. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.
    10. Stefano Carattini & Simon Levin & Alessandro Tavoni, 2019. "Cooperation in the Climate Commons," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 227-247.
    11. Helen Scarborough & Jeff Bennett, 2012. "Cost–Benefit Analysis and Distributional Preferences," Books, Edward Elgar Publishing, number 14376, April.
    12. Elisabeth Gsottbauer & Jeroen den Bergh, 2013. "Bounded rationality and social interaction in negotiating a climate agreement," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(3), pages 225-249, September.
    13. Johansson-Stenman, Olof & Konow, James, 2009. "Fairness Concerns in Environmental Economics - Do They Really Matter and If So How?," Working Papers in Economics 398, University of Gothenburg, Department of Economics.
    14. van der Pol, Thomas & Weikard, Hans-Peter & van Ierland, Ekko, 2012. "Can altruism stabilise international climate agreements?," Ecological Economics, Elsevier, vol. 81(C), pages 112-120.
    15. Köke, Sonja & Lange, Andreas, 2013. "Negotiating Environmental Agreements under Ratification Uncertainty," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79952, Verein für Socialpolitik / German Economic Association.
    16. repec:eee:jeborg:v:154:y:2018:i:c:p:191-205 is not listed on IDEAS
    17. Yu-Hsuan Lin, 2018. "How social preferences influence the stability of a climate coalition," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 151-166.
    18. Brigitte Knopf, Ottmar Edenhofer, Christian Flachsland, Marcel T. J. Kok, Hermann Lotze-Campen, Gunnar Luderer, Alexander Popp, Detlef P. van Vuuren, 2010. "Managing the Low-Carbon Transition - From Model Results to Policies," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
    19. Charles D. Kolstad, 2011. "Public Goods Agreements with Other-Regarding Preferences," NBER Working Papers 17017, National Bureau of Economic Research, Inc.
    20. Nyborg, Karine, 2014. "Reciprocal Climate Negotiators: Balancing Anger against Even More Anger," Memorandum 17/2014, Oslo University, Department of Economics.

    More about this item

    Keywords

    coalition formation; equity preference; inequality aversion; international environmental negotiations; per capita emission levels; C7; D63; H41; Q00;

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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