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International environmental agreements with mixed strategies and investment

  • Hong, Fuhai

    ()

    (School of Economics, Shanghai University of Finance and Economics)

  • Karp, Larry

    ()

    (University of California, Berkeley. Dept of agricultural and resource economics)

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.

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Paper provided by University of California at Berkeley, Department of Agricultural and Resource Economics and Policy in its series CUDARE Working Paper Series with number 1129.

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Length: 35 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:are:cudare:1129
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  1. Aart de Zeeuw, 2005. "Dynamic Effects on the Stability of International Environmental Agreements," Working Papers 2005.41, Fondazione Eni Enrico Mattei.
  2. Scott Barrett, 2006. "Climate Treaties and "Breakthrough" Technologies," American Economic Review, American Economic Association, vol. 96(2), pages 22-25, May.
  3. Dritan Osmani & Richard Tol, 2009. "Toward Farsightedly Stable International Environmental Agreements," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(3), pages 455-492, 06.
  4. DIAMANTOUDI, Effrosyni & SARTZETAKIS, Eftichios, 2002. "International environmental agreements - The role of foresight," CORE Discussion Papers 2002061, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  7. Michael Hoel & Aart de Zeeuw, 2009. "Can a Focus on Breakthrough Technologies Improve the Performance of International Environmental Agreements?," NBER Working Papers 15043, National Bureau of Economic Research, Inc.
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  9. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer, vol. 26(3), pages 379-401.
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  11. Karp, Larry & Simon, Leo, 2012. "Participation Games and international environmental agreements: a nonparametric model," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5693n1nf, Department of Agricultural & Resource Economics, UC Berkeley.
  12. Michael Finus & Stefan Maus, 2008. "Modesty May Pay!," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 801-826, October.
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  19. CHANDER, Parkash & TULKENS, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," CORE Discussion Papers 1994048, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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  29. Alistair Ulph, 2004. "Stable International Environmental Agreements with a Stock Pollutant, Uncertainty and Learning," Journal of Risk and Uncertainty, Springer, vol. 29(1), pages 53-73, 07.
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