International Environmental Agreements: Emissions Trade, Safety Valves and Escape Clauses

Larry Karp and Jinhua Zhao

Revue économique, 2010, vol. 61, issue 1, 153-182

Abstract: We explain how the structure of multi-national or multi-regional environmental agreements affect their chance of success. Trade in emissions permits has ambiguous and in some cases surprising effects on both the equilibrium level of abatement, and on the ability to persuade nations or regions to participate in environmental agreements. An escape clause policy and a safety valve policy have essentially the same properties when membership in environmental agreement is pre-determined, but they create markedly different effects on the incentives to join such an agreement. The two policies lead to a qualitative difference in the leverage that a potential member of the agreement exercises on other members. JEL classification numbers C72, H4, Q54

Keywords: Kyoto Protocol; escape clause; emissions trade; cost uncertainty; participation game; International Environmental Agreement (search for similar items in EconPapers)
JEL-codes: C72 H4 Q54 (search for similar items in EconPapers)
Date: 2010
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Related works:
Working Paper: International Environmental Agreements: Emissions trade, safety valves and escape clauses (2012)
Working Paper: International Environmental Agreements: Emissions trade, safety valves and escape clauses (2009)
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