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Agreeing on efficient emissions reduction

Author

Listed:
  • Olivier Bos

    (LEMMA - Université Panthéon Assas (Paris 2))

  • Beatrice Roussillon

    () (UGA UFR FEG - Université Grenoble Alpes - Faculté d'Économie de Grenoble - UGA - Université Grenoble Alpes, GAEL - Laboratoire d'Economie Appliquée de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - INRA - Institut National de la Recherche Agronomique)

  • Paul Schweinzer

    (Alpen-Adria-Universität Klagenfurt [Klagenfurt, Austria])

Abstract

We propose a simple contest-based mechanism providing incentives to reduce harmful emissions to their efficient level without infringing upon productive efficiency. Participation in the most stylized form of the scheme is voluntary and individually rational; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version, which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive that can serve as an effective rationale for the (gradual) formation of international environmental agreements.

Suggested Citation

  • Olivier Bos & Beatrice Roussillon & Paul Schweinzer, 2016. "Agreeing on efficient emissions reduction," Post-Print hal-01484843, HAL.
  • Handle: RePEc:hal:journl:hal-01484843
    DOI: 10.1111/sjoe.12164
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01484843
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    More about this item

    Keywords

    agreement; climate policy; contest; global change; competitive examination; competitiveness; compétitivité; émission de carbone; concours; changement climatique; politique de l'environnement; accord international sur le climat; productivité;

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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