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Environmental consciousness and moral hazard international agreements to protect the environment

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  • Petrakis, Emmanuel
  • Xepapadeas, Anastasios

Abstract

A group of countries that can potentially commit to cooperation to protect the environment are identified as environmentally-conscious countries. Conditions are examined under which they can provide self-financing side payments, to a second group of less environmentally-conscious countries, so that the two groups form a global or partial stable coalition that agrees to emit at the first-best global welfare optimum. A mechanism is also developed which must be incorporated into the agreement between the two groups, in order to induce all countries to emit at the desired level, even when global pollution has nonpoint source pollution characteristics.

Suggested Citation

  • Petrakis, Emmanuel & Xepapadeas, Anastasios, 1993. "Environmental consciousness and moral hazard international agreements to protect the environment," UC3M Working papers. Economics 2895, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:2895
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