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International environmental agreements with mixed strategies and investment

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  • Hong, Fuhsai
  • Karp, Larry S.

Abstract

We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and also reverses the policy implication of that result: with mixed strategies, equilibrium participation and welfare is higher in equilibria that involve higher investment.

Suggested Citation

  • Hong, Fuhsai & Karp, Larry S., 2012. "International environmental agreements with mixed strategies and investment," CUDARE Working Papers 123719, University of California, Berkeley, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucbecw:123719
    DOI: 10.22004/ag.econ.123719
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    More about this item

    Keywords

    Environmental Economics and Policy;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H4 - Public Economics - - Publicly Provided Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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