Asymmetry, optimal transfers and international environmental agreements
This paper applies optimal sharing rules to a coalition formation game with positive externalities, demonstrating the effectiveness of well-designed transfer schemes in improving outcomes for participation in International Environmental Agreements. A numerical exercise is conducted, providing proof of the failure of the conventional transfer schemes (Shapley value, Nash bargaining solution, Chander Tulkens transfer scheme) to meet the existence, robustness and optimality conditions set by the optimal sharing rule literature. The core result is derived from a systematic analysis of the effect that the degree of full, mean-preserving asymmetry on the formation of stable self-enforcing coalitions, under two dfferent conditions: transfers and no transfers. The effectiveness of, and participation in, International Environmental Agreements is found to increase with the degree of asymmetry under the optimal sharing rule.
|Date of creation:||Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Houghton Street, London WC2A 2AE|
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/grantham.
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Johan Eyckmans & Michael Finus, 2003.
"Coalition Formation in a Global Warming Game: How the Design of Protocols Affects the Success of Environmental Treaty-Making,"
Energy, Transport and Environment Working Papers Series
ete0317, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
- EYCKMANS, Johan & FINUS, Michael, 2003. "Coalition formation in a global warming game : how the design of protocols affects the success of environmental treaty-making," CORE Discussion Papers 2003088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
- Geoffroy de Clippel & Roberto Serrano, 2008.
"Marginal Contributions and Externalities in the Value,"
Econometric Society, vol. 76(6), pages 1413-1436, November.
- Geoffroy de Clippel & Roberto Serrano, 2007. "Marginal contributions and externalities in the value," Working Papers 2007-04, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
- Serrano, Roberto & Clippel, Geoffroy de, 2005. "Marginal contributions and externalities in the value," UC3M Working papers. Economics we057339, Universidad Carlos III de Madrid. Departamento de Economía.
- Geoffroy de Clippel & Roberto Serrano, 2005. "Marginal Contributions and Externalities in the Value," Working Papers 2005-11, Brown University, Department of Economics.
- Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983.
"On the Stability of Collusive Price Leadership,"
Canadian Journal of Economics,
Canadian Economics Association, vol. 16(1), pages 17-25, February.
- Sergiu Hart, 2006. "Shapley Value," Discussion Paper Series dp421, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
- Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
- Johan Eyckmans & Michael Finus, 2007. "Measures to enhance the success of global climate treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(1), pages 73-97, March.
- Olivier Deschênes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
- Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
- MATTHEW McGINTY, 2011. "A Risk‐Dominant Allocation: Maximizing Coalition Stability," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(2), pages 311-325, 04.
- Ray, D. & Vohra, R., 1996.
"A Theory of Endogenous Coalition Structure,"
68, Boston University - Industry Studies Programme.
- Hans-Peter Weikard, 2009.
"Cartel Stability Under An Optimal Sharing Rule,"
University of Manchester, vol. 77(5), pages 575-593, 09.
- Eyckmans, Johan & Finus, Michael, 2009.
"An Almost Ideal Sharing Scheme for Coalition Games with Externalities,"
Stirling Economics Discussion Papers
2009-10, University of Stirling, Division of Economics.
- Johan Eyckmans & Michael Finus, 2004. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Working Papers 2004.155, Fondazione Eni Enrico Mattei.
- Johan Eyckmans & Michael Finus, 2004. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Energy, Transport and Environment Working Papers Series ete0414, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
- Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
- Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
- Macho-Stadler, Ines & Perez-Castrillo, David & Wettstein, David, 2007. "Sharing the surplus: An extension of the Shapley value for environments with externalities," Journal of Economic Theory, Elsevier, vol. 135(1), pages 339-356, July.
- Fuentes-Albero, Cristina & Rubio, Santiago J., 2010.
"Can international environmental cooperation be bought?,"
European Journal of Operational Research,
Elsevier, vol. 202(1), pages 255-264, April.
- Fuentes Albero Cristina & Rubio Jorge Santiago J., 2008. "Can International Environmental Cooperation Be Bought?," Working Papers 2010101, Fundacion BBVA / BBVA Foundation.
- Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
- Antonio Villar Notario & Carmen Herrero Blanco & Michael Maschler, 1996.
"Individual rights and collective responsibility: The rights-egalitarian solution,"
Working Papers. Serie AD
1996-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Herrero, Carmen & Maschler, Michael & Villar, Antonio, 1999. "Individual rights and collective responsibility: the rights-egalitarian solution," Mathematical Social Sciences, Elsevier, vol. 37(1), pages 59-77, January.
- Carraro, Carlo & Siniscalco, Domenico, 1991.
"Strategies for the International Protection of the Environment,"
CEPR Discussion Papers
568, C.E.P.R. Discussion Papers.
- Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
When requesting a correction, please mention this item's handle: RePEc:lsg:lsgwps:wp66. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (The GRI Administration)
If references are entirely missing, you can add them using this form.