Toward Farsightedly Stable International Environmental Agreements

Dritan Osmani () and Richard S.J. Tol ()

No FNU-140, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: The stability of International Environmental Agreements (IEA) is analyzed by using game theory. The integrated assessment model FUND provides the cost-bene¯t payo® functions of pollution abatement for sixteen di®erent world regions. The farsighted stability concept of Chwe (1994) is used and solved by combinatorial algorithms. The farsighted stability con- cept captures the perfect foresight of the players and predicts which coalitions can be formed when players are farsighted. All farsightedly stable coalitions are found as well as their im- provement to environment and welfare. The farsightedly stable coalitions are re¯ned further to the preferred farsightedly stable coalitions. The d'Aspremont stable coalitions are very shortly presented in order to compare with farsighted stable ones. The stability concept of d'Aspremont et al. (1983) assumes that players are myopic and consider only single-player movements.

Keywords: game theory; integrated assessment modeling; farsighted stability; coalition formation; d'Aspremont stability (search for similar items in EconPapers)
JEL-codes: C72 Q54 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr, nep-env and nep-gth
Date: Written 2007-07
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