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Efficient International Environmental Agreements for Correlated Transnational Pollutants in the Presence of Free Trade of Goods and International Transfers


  • Silva, Emilson C. D.
  • Zhu, Xie


We examine numerous settings in which large strategic nations make environmental policies in the presence of international trade and form coalitions that aim to mitigate global or continental transnational pollution. We show that every nation has incentives to internalize all emission externalities and neutralize terms-of-trade effects in various settings in which all nations belong to coalitions, the coalitions are completely interconnected and the international transfers promoted within all coalitions are proportionally equitable. Although many efficient international arrangements feature coalitions with fewer than the total number of nations, all efficient arrangements yield payoffs identical to those produced by the grand coalition.

Suggested Citation

  • Silva, Emilson C. D. & Zhu, Xie, 2011. "Efficient International Environmental Agreements for Correlated Transnational Pollutants in the Presence of Free Trade of Goods and International Transfers," Strategic Behavior and the Environment, now publishers, vol. 1(2), pages 175-197, April.
  • Handle: RePEc:now:jnlsbe:102.00000008

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    International environmental agreements; Climate change; Acid rain; Emission permit markets; Proportional equity; International trade; Coalitions;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth


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