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A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution

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  • CHANDER, Parkash

    (California Institute of Technology, Pasadena and Indian Statistical Institute (ISI), New Delhi)

  • TULKENS, Henry

    () (CORE and IRES, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

For a simple economic model of transfrontier pollution, widely used in theoretical studies of international treaties bearing on joint abatement, we exhibit in this paper a scheme for sharing national abatement costs, through international financial transfers, which is inspired by a very classical solution concept offered in the theory of cooperative games, namely the "core" of a game. The scheme has the following properties: (i) total damage and abatement costs in all countries are minimized (optimality property), and (ii) no "coalition", Le. subset, of countries can achieve lower such total costs for its members by taking another course of action in terms of emissions and/or transfers, under some reasonable assumption as to the reactions of those not in the coalition (core property).

Suggested Citation

  • CHANDER, Parkash & TULKENS, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," LIDAM Discussion Papers CORE 1994048, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:1994048
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    References listed on IDEAS

    as
    1. Parkash Chander & Henry Tulkens, 2006. "The Core of an Economy with Multilateral Environmental Externalities," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 153-175, Springer.
    2. Shapley, Lloyd S & Shubik, Martin, 1969. "On the Core of an Economic System with Externalities," American Economic Review, American Economic Association, vol. 59(4), pages 678-684, Part I Se.
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    5. Foley, Duncan K, 1970. "Lindahl's Solution and the Core of an Economy with Public Goods," Econometrica, Econometric Society, vol. 38(1), pages 66-72, January.
    6. Parkash Chander & Henry Tulkens, 2006. "Theoretical Foundations of Negotiations and Cost Sharing in Transfrontier Pollution Problems," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 123-134, Springer.
    7. Germain, Marc & Toint, Philippe & Tulkens, Henry, 1994. "Calcul économique itératif pour les négociations internationales sur les pluies acides entre la Finlande, la Russie et l'Estonie," LIDAM Discussion Papers IRES 1994017, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
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