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Incentives to participate in an international environmental agreement

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  • Michael Hoel
  • Kerstin Schneider

Abstract

For international environmental problems involving many countries, such as, e.g., the climate problem, it is unlikely that all countries will participate in an international environmental agreement. If some countries commit themselves to cooperate, while the remaining countries act independently and in pure self-interest, it appears to be possible to achieve a Pareto improvement if the non-signatory countries reduce their emissions, in exchange for transfers from the countries which sign an agreement. However, the paper shows that the prospect of receiving a transfer for reducing one's emissions provided the country does not commit itself to cooperation, tends to reduce the incentive a country might have to commit itself to cooperation. Moreover, if the disincentive effect of such side payments is strong, total emissions will be higher in a situation with side payments than in a situation in which the signatory countries commit themselves to not give transfers to free riding countries. Copyright Kluwer Academic Publishers 1997

Suggested Citation

  • Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
  • Handle: RePEc:kap:enreec:v:9:y:1997:i:2:p:153-170
    DOI: 10.1007/BF02441376
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    References listed on IDEAS

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    1. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    2. Torvanger, A., 1993. "Efficient Contracts in a Game of Nations Pursuing Greenhouse Gas Emissions Abatement," Memorandum 03/1993, Oslo University, Department of Economics.
    3. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    4. Elster, Jon, 1989. "Social Norms and Economic Theory," Journal of Economic Perspectives, American Economic Association, vol. 3(4), pages 99-117, Fall.
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