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A core-theoretic solution for the design of cooperative agreements on transfrontier pollution

  • Parkash Chander

    ()

  • Henry Tulkens

    ()

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we exhibit in this paper a scheme for sharing national abatement costs, through international financial transfers, which is inspired by a very classical solution concept offered in the theory of cooperative games, namely the "core" of a game. The scheme has the following properties: (i) total damage and abatement costs in all countries are minimized (optimality property), and (ii) no "coalition", Le. subset, of countries can achieve lower such total costs for its members by taking another course of action in terms of emissions and/or transfers, under some reasonable assumption as to the reactions of those not in the coalition (core property).

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File URL: http://hdl.handle.net/10.1007/BF00877502
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Article provided by Springer in its journal International Tax and Public Finance.

Volume (Year): 2 (1995)
Issue (Month): 2 (August)
Pages: 279-293

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Handle: RePEc:kap:itaxpf:v:2:y:1995:i:2:p:279-293
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  1. Germain, Marc & Toint, Philippe & Tulkens, Henry, 1994. "Calcul économique itératif pour les négociations internationales sur les pluies acides entre la Finlande, la Russie et l'Estonie," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1994017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Chander, Parkash, 1993. "Dynamic Procedures and Incentives in Public Good Economies," Econometrica, Econometric Society, vol. 61(6), pages 1341-54, November.
  4. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  5. Dasgupta, Partha & Hammond, Peter & Maskin, Eric, 1980. "On Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, vol. 47(5), pages 857-60, October.
  6. D. K. Foley, 1967. "Lindahl's Solution and the Core of an Economy with Public Goods," Working papers 3, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
  8. CHANDER, Parkash & TULKENS, Henry, . "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," CORE Discussion Papers RP -983, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Scarf, Herbert E., 1971. "On the existence of a coopertive solution for a general class of N-person games," Journal of Economic Theory, Elsevier, vol. 3(2), pages 169-181, June.
  10. Dreze, Jacques H & de la Vallee Poussin, D, 1971. "A Tatonnement Process for Public Goods," Review of Economic Studies, Wiley Blackwell, vol. 38(114), pages 133-50, April.
  11. Kwerel, Evan, 1977. "To Tell the Truth: Imperfect Information and Optimal Pollution Control," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 595-601, October.
  12. Shapley, Lloyd S & Shubik, Martin, 1969. "On the Core of an Economic System with Externalities," American Economic Review, American Economic Association, vol. 59(4), pages 678-84, Part I Se.
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