Developing Countries and Environmental Protection: The Effects of Budget Balance and Pollution Ceiling Constraints
I analyze the problem faced by an asymmetrically informed supranational governmental authority (SNGA) with limited financial resources who wishes to design an International Environmental Agreement (IEA). The SNGA cannot contract directly with polluting firms in the various LDCs, but he must deal with such firms through their governments. I study this tripartite hierarchical interaction and focus on the properties of the optimal ex post contracts (IEAs), which can be implemented by the SNGA, in turn, in the case where governments and firms in each nation do not collude and then in the case where governments and firms do collude. I find that the monetary transfers necessary to induce optimal behavior by governments and firms are not very sensitive to the presence of collusion. However, because the optimal contracts satisfy budget balance, and because there is a ceiling on the amount of pollution reduction that an IEA can require, the level and pattern of pollution abatement are never ideal. My analysis suggests that IEAs are not inherently doomed due to a basic monitoring and enforcement problem arising from national sovereignty. However, the success of IEAs is fundamentally contingent on the funds available for environmental protection and the pollution reduction ceiling negotiated by the SNGA and the LDC government.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Jun 1996|
|Date of revision:|
|Publication status:||forthcoming in Journal of Development Economics|
|Contact details of provider:|| Web page: http://apec.usu.edu/|
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.:
- Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
- Kofman, Fred & Lawarree, Jacques, 1993.
"Collusion in Hierarchical Agency,"
Econometric Society, vol. 61(3), pages 629-56, May.
- Kofman, F. & Lawarree, J., 1990. "Collusion in Hierarchical Agency," Working Papers 91-01, University of Washington, Department of Economics.
- Kofman, F. & Lawarree, J., 1990. "Collusion in Hierarchical Agency," Discussion Papers in Economics at the University of Washington 91-01, Department of Economics at the University of Washington.
- Batabyal, Amitrajeet A., 1996.
"An Agenda for the Design and Study of International Environmental Agreements,"
9620, Utah State University, Department of Economics.
- Batabyal, Amittrajeet A., 1996. "An agenda for the design and study of international environmental agreements," Ecological Economics, Elsevier, vol. 19(1), pages 3-9, October.
- Batabyal, Amitrajeet A., 1996. "An Agenda For The Design And Study Of International Environmental Agreements," Economics Research Institute, ERI Study Papers 28353, Utah State University, Economics Department.
- Michael Hoel, 1992. "International environment conventions: The case of uniform reductions of emissions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(2), pages 141-159, March.
- Hurley, Terrance M. & Shogren, Jason F., 1997. "Environmental Conflicts and the SLAPP," Journal of Environmental Economics and Management, Elsevier, vol. 33(3), pages 253-273, July.
- Jean Tirole, 1988. "The Multicontract Organization," Canadian Journal of Economics, Canadian Economics Association, vol. 21(3), pages 459-66, August.
- Batabyal, Amitrajeet A., 1995. "Leading issues in domestic environmental regulation: A review essay," Ecological Economics, Elsevier, vol. 12(1), pages 23-39, January.
- Black, Jane & Levi, Maurice D & de Meza, David, 1993. "Creating a Good Atmosphere: Minimum Participation for Tackling the 'Greenhouse Effect.'," Economica, London School of Economics and Political Science, vol. 60(239), pages 281-93, August.
- Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
- Todd Sandler & Keith Sargent, 1995. "Management of Transnational Commons: Coordination, Publicness, and Treaty Formation," Land Economics, University of Wisconsin Press, vol. 71(2), pages 145-162.
- Bernauer, Thomas, 1995. "The effect of international environmental institutions: how we might learn more," International Organization, Cambridge University Press, vol. 49(02), pages 351-377, March.
When requesting a correction, please mention this item's handle: RePEc:usu:wpaper:9617. 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: (John Gilbert)
If references are entirely missing, you can add them using this form.