Forging a Global Environmental Agreement through Trade Sanctions on Free Riders?

Thomas Eichner and Rüdiger Pethig

No 5402, CESifo Working Paper Series from CESifo

Abstract: This paper studies the formation of self-enforcing global environmental agreements in a world economy with international trade and two groups of countries that differ with respect to fuel demand and environmental damage. It investigates whether the signatories’ threat to embargo (potential) free riders secures all countries’ participation in the agreement. Resorting to numerical analysis, we find that an embargo may be unnecessary, ineffective or even counterproductive - depending on the degree of asymmetry and other parameters. On some subset of parameters, the embargo stabilizes the otherwise unstable global agreement, but the threat of embargo is not credible. However, in some of these cases credibility can be restored by suitable intra-coalition transfers.

Keywords: embargo; trade; asymmetry; free rider; fuel demand; climate damage (search for similar items in EconPapers)
JEL-codes: F18 Q50 Q58 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp5402.pdf (application/pdf)

Related works:
Working Paper: Forging a global environmental agreement through trade sanctions on free riders? (2015)
Working Paper: Forging a global environmental agreement through trade sanctions on free riders? (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_5402

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().