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Sticks and carrots for the design of international climate agreements with renegotiations

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  • Hans-Peter Weikard

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  • Rob Dellink

Abstract

This paper examines renegotiations of international climate agreements for carbon abatement. We explore coalition stability under ‘optimal transfers’ that have been suggested to stabilise international environmental agreements (e.g. McGinty in Oxford Economic Papers 59, 45–62, 2007 ). Such transfer schemes need to be refined when agreements are renegotiated. We determine the requirements that transfers between signatories of an international climate agreement must satisfy in order to stabilise the sequence of agreements that performs best in terms of provision of the public good ‘carbon abatement’. If these requirements are met, no country wants to change its membership status at any stage. In order to demonstrate the applicability of our result we use the STACO model, a 12-regions global model, to assess the impact of well-designed transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiations if renegotations take place sufficiently early. Copyright The Author(s) 2014

Suggested Citation

  • Hans-Peter Weikard & Rob Dellink, 2014. "Sticks and carrots for the design of international climate agreements with renegotiations," Annals of Operations Research, Springer, vol. 220(1), pages 49-68, September.
  • Handle: RePEc:spr:annopr:v:220:y:2014:i:1:p:49-68:10.1007/s10479-010-0795-x
    DOI: 10.1007/s10479-010-0795-x
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    1. repec:spr:ieaple:v:17:y:2017:i:5:d:10.1007_s10784-017-9351-3 is not listed on IDEAS
    2. Hans-Peter Weikard & Rob Dellink & Ekko Ierland, 2010. "Renegotiations in the Greenhouse," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(4), pages 573-596, April.

    More about this item

    Keywords

    Stability of coalitions; International environmental agreements; Partition function approach; Sharing rules; Renegotiations; Climate agreements;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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