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Agreeing on efficient emissions reduction

Listed author(s):
  • 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 - INRA - Institut National de la Recherche Agronomique - Université Grenoble Alpes - Grenoble 2)

  • Paul Schweinzer

    (Alpen Adria Universität Klagenfurt)

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.

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Paper provided by HAL in its series Post-Print with number hal-01484843.

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Date of creation: 2016
Publication status: Published in The Scandinavian Journal of Economics, 2016, 118 (4), pp.785-815. <10.1111/sjoe.12164>
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
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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