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International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?

Author

Listed:
  • Michael Finus

    (University of Exeter)

  • Pedro Pintassilgo

    (University of Algarve)

Abstract

Na and Shin (1998) showed that the veil of uncertainty can be conducive to the success of self-enforcing international environmental agreements. Later papers confirmed this negative conclusion about the role of learning. In the light of intensified research efforts worldwide to reduce uncertainty about the environmental impact of emissions and the cost of reducing them, this conclusion is intriguing. The purpose of this paper is threefold. First, we analyze whether the result carries over to a more general setting without restriction on the number of players and which considers not only no and full learning but also partial learning. Second, we test whether the conclusion also holds if there is uncertainty about abatement costs instead of uncertainty about the benefits from global abatement. Third, we propose a transfer scheme that mitigates the possible negative effect of learning and which may even transform it into a positive effect.

Suggested Citation

  • Michael Finus & Pedro Pintassilgo, 2010. "International Environmental Agreements under Uncertainty: Does the Veil of Uncertainty Help?," Working Papers 2010.79, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2010.79
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    Cited by:

    1. By Michael Finus & Raoul Schneider, 2015. "Scope and compatibility of measures in international fisheries agreements," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 865-888.
    2. Carlo Carraro, 2014. "International environmental cooperation," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 26, pages 418-431, Edward Elgar Publishing.
    3. Fabio Antoniou & Panos Hatzipanayotou & Michael S. Michael & Nikos Tsakiris, 2019. "On the Principles of Commodity Taxation under Interregional Externalities," University of Cyprus Working Papers in Economics 03-2019, University of Cyprus Department of Economics.
    4. Minh Ha-Duong, 2012. "Review of risk and uncertainty concepts for climate change assessments including human dimensions," CIRED Working Papers halshs-00008089, HAL.
    5. Ryusuke Shinohara, 2021. "Voluntary Participation in International Environmental Agreements and Authority Structures in a Federation: A Note," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(1), pages 25-32, May.
    6. Fuhai Hong & Susheng Wang, 2012. "Climate Policy, Learning, and Technology Adoption in Small Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 391-411, March.
    7. Francisco J Andre & Michael Finus & Leyla Sayin, 2017. "Endogenous Learning to Reduce Uncertainty in Climate Change: The Role of Knowledge Spillovers and the Degree of Cooperation in International Environmental Agreements," Department of Economics Working Papers 66/17, University of Bath, Department of Economics.

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    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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