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Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis

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  • Todd Cherry
  • David McEvoy

Abstract

This paper uses laboratory experiments to evaluate the performance of a deposit-refund mechanism used to enforce compliance with voluntary public-good commitments made in the absence of strong regulatory institutions. With this mechanism agents decide whether to join an agreement and pay a deposit prior to making their contribution decisions. If an agreement receives sufficient membership to form, members then make their contribution decisions and compliant members are refunded their deposits. If an agreement does not form, then deposits are immediately refunded and a standard voluntary contribution game is played. We find that the deposit-refund mechanism achieves nearly full efficiency when agreements require full participation, but is far less effective, and in some cases disruptive, when agreements require only partial participation. As the mechanism does not require the existence of strong sanctioning institutions, it is particularly suited for enforcing compliance with international environmental agreements. Copyright Springer Science+Business Media B.V. 2013

Suggested Citation

  • Todd Cherry & David McEvoy, 2013. "Enforcing Compliance with Environmental Agreements in the Absence of Strong Institutions: An Experimental Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(1), pages 63-77, January.
    • Handle: RePEc:kap:enreec:v:54:y:2013:i:1:p:63-77
    DOI: 10.1007/s10640-012-9581-3
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    3. Christian Feige & Karl-Martin Ehrhart & Jan Krämer, 2018. "Climate Negotiations in the Lab: A Threshold Public Goods Game with Heterogeneous Contributions Costs and Non-binding Voting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 343-362, June.
    4. Wang, Jianwei & Chen, Wei & Yu, Fengyuan & Zhou, Siyuan & He, Jialu & Xu, Wenshu & Dai, Wenhui, 2024. "The emergence of cooperation in the context of prior agreement with threshold and posterior compensation," Applied Mathematics and Computation, Elsevier, vol. 474(C).
    5. David McEvoy, 2013. "Enforcing compliance with international environmental agreements using a deposit-refund system," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 13(4), pages 481-496, November.
    6. Federica Alberti & Edward J. Cartwright, 2016. "Full agreement and the provision of threshold public goods," Public Choice, Springer, vol. 166(1), pages 205-233, January.
    7. Stine Aakre & Leif Helland & Jon Hovi, 2016. "When Does Informal Enforcement Work?," Journal of Conflict Resolution, Peace Science Society (International), vol. 60(7), pages 1312-1340, October.
    8. Tatsuya Sasaki & Isamu Okada & Satoshi Uchida & Xiaojie Chen, 2015. "Commitment to Cooperation and Peer Punishment: Its Evolution," Games, MDPI, vol. 6(4), pages 1-14, November.
    9. Flores, Lucas S. & Han, The Anh, 2024. "Evolution of commitment in the spatial public goods game through institutional incentives," Applied Mathematics and Computation, Elsevier, vol. 473(C).
    10. Goeschl, Timo & Haberl, Beatrix & Soldà, Alice, 2023. "How to Organize Monitoring and Punishment: Experimental Evidence," Working Papers 0737, University of Heidelberg, Department of Economics.
    11. Eichner, Thomas & Kollenbach, Gilbert, 2022. "Environmental agreements, research and technological spillovers," European Journal of Operational Research, Elsevier, vol. 300(1), pages 366-377.
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    14. The Anh Han & Luís Moniz Pereira & Tom Lenaerts & Francisco C Santos, 2021. "Mediating artificial intelligence developments through negative and positive incentives," PLOS ONE, Public Library of Science, vol. 16(1), pages 1-21, January.
    15. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.

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    More about this item

    Keywords

    Enforcing compliance; Environmental agreements; Experimental economics; Deposit refund; International environmental agreements; D02; Q50; H41; H87; C90;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General

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