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Regional Initiatives and the Cost of Delaying Binding Climate Change Agreements

Listed author(s):
  • Beccherle, Julien
  • Tirole, Jean

The Kyoto and Copenhagen Protocols on climate change mitigation postponed the specification of binding commitments to a future negotiation. This paper analyzes the strategic implications of delayed negotiations. While, as iswell-understood, the incentive to free ride leads to excessive emissions prior to a binding agreement, the cost of delay is magnified by players’ attempt to secure a favorable bargaining position in the future negotiation. A “brinkmanship”, an “effort rebalancing”, and a “raising rival’s cost” effects all concur to generate high post-agreement emissions. The paper applies this general insight to a variety of policy instruments, from the issuance of forward or bankable permits to standards and green investment policies.

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 628.

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Date of creation: Dec 2010
Publication status: Published in Journal of Public Economics, vol. 95, décembre 2011, p. 1339-1348.
Handle: RePEc:ide:wpaper:22587
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