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Efficiency of Uniform Standards for Transboundary Pollution Problems: a note

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  • Basak Bayramoglu

    (PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Jean-François Jacques

    (EQUIPE UNIVERSITAIRE DE RECHERCHE "INSTITUTIONS : COORDINATION, ORGANISATION" - EURIsCO - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres)

Abstract

This note proposes an example which contradicts the idea that similar countries will negotiate an agreement on a uniform standard. It shows that strictly identical countries may have an interest in reducing their emissions differently, and not in a uniform way. This result relies on the existence of fixed costs in the abatement technology. Identical countries could be better off by signing an agreement on differentiated standards in order to exploit increasing returns to scale in the abatement activities. More specifically, one of the countries abates for both, and pays for the fixed cost of investment. In return, it is compensated by monetary transfers for this effort. We show that the level of fixed cost must be sufficiently high in this case.

Suggested Citation

  • Basak Bayramoglu & Jean-François Jacques, 2007. "Efficiency of Uniform Standards for Transboundary Pollution Problems: a note," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00159575, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00159575
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00159575
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    Keywords

    Transboundary pollution; cooperative games; bargaining; standards; transfers; fixed cost;
    All these keywords.

    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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