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The Dynamics of Climate Agreements

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  • Bard Harstad

Abstract

I provide a novel dynamic model with private provision of public bads and investments in technologies. The analysis is tractable and the MPE unique. By adding incomplete contracts, I derive implications of and for international climate treaties. While the non-cooperative equilibrium is bad, short-term agreements are worse due to hold-up problems. A long-term agreement should be more ambitious if it is rela- tively short-lasting and the technological externality large. The length itself should increase in this externality. With renegotiation, the outcome is rst best. The technological externalities are related to trade agreements, making them strategic substitutes to climate treatie

Suggested Citation

  • Bard Harstad, 2009. "The Dynamics of Climate Agreements," Discussion Papers 1474, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1474
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    Cited by:

    1. Michael Jakob & Kai Lessmann, 2012. "Signaling in international environmental agreements: the case of early and delayed action," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 12(4), pages 309-325, November.
    2. Bård Harstad, 2018. "Pledge-and-Review Bargaining," CESifo Working Paper Series 7296, CESifo.
    3. Rubio, Santiago J., 2018. "Self-Enforcing International Environmental Agreements: Adaptation and Complementarity," ETA: Economic Theory and Applications 276179, Fondazione Eni Enrico Mattei (FEEM).
    4. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics 1403, Faculty of Economics, University of Cambridge.
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    6. Michael Jakob & Gunnar Luderer & Jan Steckel & Massimo Tavoni & Stephanie Monjon, 2012. "Time to act now? Assessing the costs of delaying climate measures and benefits of early action," Climatic Change, Springer, vol. 114(1), pages 79-99, September.
    7. Carsten Helm & Franz Wirl, 2016. "Climate Policies with Private Information: The Case for Unilateral Action," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(4), pages 893-916.
    8. Stefano Carattini & Simon Levin & Alessandro Tavoni, 2019. "Cooperation in the Climate Commons," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 13(2), pages 227-247.
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    12. Hans Gersbach & Marie-Catherine Riekhof, 2017. "Technology Treaties and Climate Change," CER-ETH Economics working paper series 17/268, CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich.
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    17. Olivier Bos & Béatrice Roussillon & Paul Schweinzer, 2016. "Agreeing on Efficient Emissions Reduction," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(4), pages 785-815, October.
    18. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    19. Holtsmark, Katinka & Midttømme, Kristoffer, 2015. "The Dynamics of Linking Permit Markets," Memorandum 02/2015, Oslo University, Department of Economics.
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    More about this item

    Keywords

    Dynamic private provision of public goods; dynamic common pool prob- lems; dynamic hold-up problems; incomplete contracts; time horizon of contracts; renegotiation design; climate change; climate agreements and trade agreements;

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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