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Time-Inconsistent Domestic Environmental Policies and Optimal International Environmental Arrangements

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  • Aekapol Chongvilaivan
  • Jung Hur

Abstract

We employ the standard pollution control incorporating countries' asymmetries, not only in their consumption and environmental concerns, but also in their environmental technologies. First, we show that the absence of international collaboration makes domestic environmental policies discretionary and may result in a time-inconsistent outcome. Then, we compare two cooperative regimes: the international environmental agreement (IEA) and the central environmental authority (CEA). In certain conditions, IEAs may not be more efficient than CEAs in pollution abatement. Furthermore, although the IEA Pareto-dominates the CEA, the success of IEAs may be hampered by conflicts of interest among the signatories.

Suggested Citation

  • Aekapol Chongvilaivan & Jung Hur, 2007. "Time-Inconsistent Domestic Environmental Policies and Optimal International Environmental Arrangements," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 731-758, December.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200712)163:4_731:tdepao_2.0.tx_2-6
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    References listed on IDEAS

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    1. Dieter Helm & Cameron Hepburn & Richard Mash, 2003. "Time Inconsistent Environmental Policy and Optimal Delegation," Economics Series Working Papers 175, University of Oxford, Department of Economics.
    2. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
    3. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    4. Dockner, Engelbert J. & Van Long, Ngo & Sorger, Gerhard, 1996. "Analysis of Nash equilibria in a class of capital accumulation games," Journal of Economic Dynamics and Control, Elsevier, vol. 20(6-7), pages 1209-1235.
    5. Dockner,Engelbert J. & Jorgensen,Steffen & Long,Ngo Van & Sorger,Gerhard, 2000. "Differential Games in Economics and Management Science," Cambridge Books, Cambridge University Press, number 9780521637329, May.
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    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • F18 - International Economics - - Trade - - - Trade and Environment

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