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North–South Negotiations on Emission Reductions: A Bargaining Approach

Dapeng Cai () and Jie Li ()
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Jie Li: Jinan University

Environmental & Resource Economics, 2018, vol. 71, issue 1, 157-177

Abstract: Abstract This article models North–South negotiations on emission reductions, where the North provides side payments in exchange for the South’s adoption of a more stringent emission standard. We find that depending on where firms compete, strong asymmetry among regions (the two regions’ different valuations of side payments and climate change damage) can produce self-enforcing cooperative agreements. Moreover, the South’s optimal standard choice can be one of two polar cases, i.e., either the “cleanest” or the “dirtiest,” irrespective of the continuum of standards available. The results above can also hold true when both parties bargain over the South’s emission tax.

Keywords: Emission reductions; Bargaining; Side payments; North–South negotiation; Abatement technology; Emission tax (search for similar items in EconPapers)
JEL-codes: C71 F18 L13 Q52 Q54 (search for similar items in EconPapers)
Date: 2018
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