Voluntary Commitment to Environmental Protection: A Bounded Rationality Approach

Markus Pasche

No 22/2004, Jenaer Schriften zur Wirtschaftswissenschaft (Expired!) from Friedrich Schiller University of Jena, School of of Economics and Business Administration

Abstract: Global environmental protection is characterized as a public good. In contrast to the national level where the state is able to regulate external effects, there is a lack of supranational institutions which have enough power to force countries to reduce pollution levels. In spite of the free-riding problem it can nevertheless be observed that countries sometimes commit themselves to contribute to the public good `environmental protection'. The case of the Kyoto protocol for global $CO_2$ reduction demonstrates that some countries make substantial volunatry contributions, but others do not or on a much less level. The paper provides a game-theoretic explanation how the free-riding-problem can be overcome to some extent by voluntary cooperative behavior. It is analysed under which conditions free-riding countries can be motivated to make at least small pollution reduction efforts.

Keywords: global environmental policy; public good; voluntary cooperation; bounded rationality; game theory. (search for similar items in EconPapers)
JEL-codes: C72 D70 Q58 (search for similar items in EconPapers)
Date: 2004-09
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Published in Bleischwitz, R., Budzinski, O. (Eds.), Environmental Economics: Institutions, Competition, Rationality.

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Persistent link: https://EconPapers.repec.org/RePEc:jen:jenasw:2004-22

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