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Financial Mechanism and Enforceability of International Environmental Agreements


  • Kimiko Terai



We examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods. In the present model, the forces creating international agreement are a politician’s motive for re-election and a financial mechanism for compliance. If a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement, and is aware that his ex post deviation will be deterred by the financial mechanism, he too decides to participate in the agreement, which then corrects externality problems. Copyright Springer Science+Business Media B.V. 2012

Suggested Citation

  • Kimiko Terai, 2012. "Financial Mechanism and Enforceability of International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 53(2), pages 297-308, October.
  • Handle: RePEc:kap:enreec:v:53:y:2012:i:2:p:297-308
    DOI: 10.1007/s10640-012-9563-5

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    References listed on IDEAS

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    More about this item


    Enforceability; Financial mechanism; International environmental agreements; Re-election concerns; Time-consistency; D72; H87; P58;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods


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