Econometric Society 57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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LEADERSHIP AND SELF-ENFORCING INTERNATIONAL ENVIRONMENTAL AGREEMENTS WITH NON-NEGATIVE EMISSIONS


Category: Economic Theory
Environmental Policy
Wednesday 28th August 2002, 09:30 - 11:00, Room: 5.9
Session Chair(s): Fridrik Baldursson, University of Iceland, ICELAND

Presenter(s): Rubio, Santiago J.

Co-Author(s): Ulph, Alistair

Keyword(s): Cournot equilibrium, international externalities, non-negative emissions, self-enforcing international environmental agreements, Stackelberg equilibrium

JEL(s): C72, D62, F02, Q20

Abstract:

In this paper a linear-quadratic emissions game is used to analyze the stability of international environmental agreements (IEA) taking explicitly into account the non-negative constraint on emissions. Our results show that the higher the environmental damages are the higher the number of countries in a self-enforcing is always that the countries in the agreement enjoy a leadership position. Without this strategic advantage, i.e. under Cournot conjecture, we show that the maximum level of cooperation consists of two countries, independently of the number of countries in the game and the scope of the gains to full-cooperation.


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Paper Reference Number: 715

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57th European Meeting
25th August 2002 - 28th August 2002, Venice, Italy

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