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The Impact of Equity-preferences on the Stability of Heterogeneous International Agreements

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  • Lange, Andreas

Abstract

This paper studies the impact of equity considerations on the stability of international agreements between heterogeneous countries. We show that allowing countries to finance abatement projects in developing countries which, due to equity-reasons, have no binding emission targets can reduce the number of cooperating countries and thereby be welfare-decreasing. Equity-concerns in industrialized countries regarding the gap between per-capita emission levels of industrialized and developing countries lead to an increased reduction in industrialized countries but do not qualitatively change the incentives to cooperate. Only if countries are inequality-averse with respect to potential differences between their abatement targets and those of other industrialized countries is the inclusion of developing countries generally profitable both in terms of participation rates and of emission reduction.

Suggested Citation

  • Lange, Andreas, 2004. "The Impact of Equity-preferences on the Stability of Heterogeneous International Agreements," ZEW Discussion Papers 04-50, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:2188
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    References listed on IDEAS

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    1. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    2. Murdoch, James C. & Sandler, Todd, 1997. "The voluntary provision of a pure public good: The case of reduced CFC emissions and the Montreal Protocol," Journal of Public Economics, Elsevier, vol. 63(3), pages 331-349, February.
    3. 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.
    4. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
    5. Toman, Michael & Shogren, Jason, 2000. "Climate Change Policy," Discussion Papers dp-00-22, Resources For the Future.
    6. Böhringer, Christoph & Helm, Carsten, 2001. "Fair division with general equilibrium effects and international climate politics," ZEW Discussion Papers 01-67, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    7. 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.
    8. Bohringer, Christoph & Vogt, Carsten, 2004. "The dismantling of a breakthrough: the Kyoto Protocol as symbolic policy," European Journal of Political Economy, Elsevier, vol. 20(3), pages 597-617, September.
    9. Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
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    Citations

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    Cited by:

    1. Kverndokk, Snorre & Rose, Adam, 2008. "Equity and Justice in Global Warming Policy," International Review of Environmental and Resource Economics, now publishers, vol. 2(2), pages 135-176, October.
    2. Lange, Andreas & Löschel, Andreas & Vogt, Carsten & Ziegler, Andreas, 2007. "On the Self-serving Use of Equity Principles in International Climate Negotiations," ZEW Discussion Papers 07-025, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2007. "On the importance of equity in international climate policy: An empirical analysis," Energy Economics, Elsevier, vol. 29(3), pages 545-562, May.
    4. Lange, Andreas & Löschel, Andreas & Vogt, Carsten & Ziegler, Andreas, 2010. "On the self-interested use of equity in international climate negotiations," European Economic Review, Elsevier, vol. 54(3), pages 359-375, April.
    5. Vogt, Carsten & Sturm, Bodo, 2011. "Implications of inequality aversion for international climate policy," ZEW Discussion Papers 11-050, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    international environmental negotiations; equity preference; coalition formation; per capita emission levels; inequality aversion;

    JEL classification:

    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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