Time-Inconsistent Domestic Environmental Policies and Optimal International Environmental Arrangements

Aekapol Chongvilaivan and Jung Hur

Journal of Institutional and Theoretical Economics (JITE), 2007, vol. 163, issue 4, 731-758

Abstract: We employ the standard pollution control incorporating countries' asymmetries, not only in their consumption and environmental concerns, but also in their environmental technologies. First, we show that the absence of international collaboration makes domestic environmental policies discretionary and may result in a time-inconsistent outcome. Then, we compare two cooperative regimes: the international environmental agreement (IEA) and the central environmental authority (CEA). In certain conditions, IEAs may not be more efficient than CEAs in pollution abatement. Furthermore, although the IEA Pareto-dominates the CEA, the success of IEAs may be hampered by conflicts of interest among the signatories.

JEL-codes: C61 C73 F18 (search for similar items in EconPapers)
Date: 2007
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