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Solving the global warming problem: beyond markets, simple mechanisms may help!

Listed author(s):
  • David Martimort

    (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - INRA - Institut National de la Recherche Agronomique - ENS Paris - École normale supérieure - Paris, PSE - Paris School of Economics)

  • Wilfried Sand-Zantman

    (GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT1 - Université Toulouse 1 Capitole - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique, TSE - Toulouse School of Economics - Toulouse School of Economics, IDEI - Institut d'économie industrielle - UT1 - Université Toulouse 1 Capitole)

his paper discusses the feasibility and performances of simple mechanisms to implement international environmental agreements in the multilateral externalities context of global warming. Asymmetric information and voluntary participation by sovereign and heterogeneous countries are key constraints on the design of those agreements. Mechanisms must prevent two sorts of free-riding problems - free riding in effort provision and free riding in participation. As markets might fail to solve simultaneously those two problems, we construct instead a simple menu of options that trades off the provision of incentives for participating countries and the provision of incentives to participate. With such a mechanism, all countries voluntarily contribute to a fund, although at different intensities, but only the most efficient ones effectively reduce their pollution below its 'business as usual' level.

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Paper provided by HAL in its series PSE - Labex "OSE-Ouvrir la Science Economique" with number halshs-00833194.

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Date of creation: May 2013
Publication status: Published in Canadian Journal of Economics / Revue Canadienne d'Économique, Wiley, 2013, 46 (2), pp.361-378. <10.1111/caje.12016>
Handle: RePEc:hal:pseose:halshs-00833194
DOI: 10.1111/caje.12016
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00833194
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

References listed on IDEAS
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  1. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 379-401.
  2. Guillaume Cheikbossian & Wilfried Sand-Zantman, 2011. "Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring," Annals of Economics and Statistics, GENES, issue 101-102, pages 327-345.
  3. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 279-293, August.
  4. repec:adr:anecst:y:2011:i:101-102:p:16 is not listed on IDEAS
  5. Martimort, David & Sand-Zantman, Wilfried, 2011. "A Mechanism Design Approach to Climate Agreements," IDEI Working Papers 682, Institut d'Économie Industrielle (IDEI), Toulouse, revised 30 Apr 2013.
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