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Uncertainty and International Negotiations on Tradable Quota Treaties




Negotiating an international tradable quota treaty between industrialised and developing countries is complicated by uncertain marginal abatement costs and non-uniform quota prices. An initial quota allocation that implies zero expected net cost to developing countries will typically be insufficient to attract their participation in the treaty. Two options to compensate for uncertainty are discussed here, extra emissions quotas and financial transfers. The latter is found to be more effective in facilitating treaty-making, but the scope of co-operation is restricted by the developing countries' risk-aversion.

Suggested Citation

  • Morten Søberg, 1998. "Uncertainty and International Negotiations on Tradable Quota Treaties," Discussion Papers 233, Statistics Norway, Research Department.
  • Handle: RePEc:ssb:dispap:233

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    References listed on IDEAS

    1. John K. Dagsvik, 1996. "Consumer Demand with Unobservable Product Attributes - Part I: Theory," Discussion Papers 166, Statistics Norway, Research Department.
    2. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 77(4), pages 634-653, November.
    3. John K. Dagsvik & Yu Zhu & Rolf Aaberge, 1998. "A Framework for Empirical Modelling of Consumer Demand with Latent Quality Attributes," Discussion Papers 229, Statistics Norway, Research Department.
    4. Reinsdorf, Marshall, 1994. "The Effect of Price Dispersion on Cost of Living Indexes," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(1), pages 137-149, February.
    5. Baye, Michael R, 1985. "Price Dispersion and Functional Price Indices," Econometrica, Econometric Society, vol. 53(1), pages 213-223, January.
    6. Leif Brubakk & John K. Dagsvik, 1998. "Consumer Demand and Unobservable Product Attributes," Discussion Papers 223, Statistics Norway, Research Department.
    7. Anderson, Ronald W, 1979. "Perfect Price Aggregation and Empirical Demand Analysis," Econometrica, Econometric Society, vol. 47(5), pages 1209-1230, September.
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    More about this item


    Tradable quotas; uncertainty;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water


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