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On the Enforcement of Cooperative Environmental Policies


  • Stephane Pallage



This paper investigates the sustainability of Pareto optimal policies for the replenishment of renewable resources shared by two countries with asymmetrical wealth. It does so within a two-country neo-classical growth model with externality. In absence of commitment, it identifies simple self-enforcing mechanisms that implement social optima for a typical international resource (clean air) and a parameterization of the model to the United States and a country five times poorer. Such mechanisms are trigger strategies involving transfers of wealth between countries and threats of economic isolation in case of defection. Necessary transfers can represent up to 2.6% of US wealth. (Copyright: Elsevier)

Suggested Citation

  • Stephane Pallage, 2000. "On the Enforcement of Cooperative Environmental Policies," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(3), pages 572-596, July.
  • Handle: RePEc:red:issued:v:3:y:2000:i:3:p:572-596
    DOI: 10.1006/redy.1999.0076

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    References listed on IDEAS

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    Cited by:

    1. Pallage, Stephane & Zimmermann, Christian, 2007. "Buying out child labor," Journal of Macroeconomics, Elsevier, vol. 29(1), pages 75-90, March.
    2. Economides, George & Miaouli, Natasha, 2006. "Federal transfers, environmental policy and economic growth," Journal of Macroeconomics, Elsevier, vol. 28(4), pages 680-699, December.
    3. Hirazawa, Makoto & Saito, Koichi & Yakita, Akira, 2011. "Effects of international sharing of pollution abatement burdens on income inequality among countries," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1615-1625, October.

    More about this item


    commitment; sustainable optima; dynamic game; renewable resource; trigger strategy; pollution; transfers;

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models


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