Supporting Environmental Agreements under Asymmetry and Minimum Participation Rule

Qian Li, Toshiyuki Fujita and Yutian Zhang

Strategic Behavior and the Environment, 2024, vol. 10, issue 1-2, 15-38

Abstract: This study analyzes the efficiency of external transfers in international environmental agreements (IEAs) with two types of heterogeneous countries differing in abatement benefit or abatement cost parameters. We introduce a minimum participation rule concerning the number of supporters, who commit to transfer welfare to induce all the other countries to form a self-enforcing IEA. The analytical result shows that an equilibrium exists where all countries except supporters become members of the agreement under a certain condition. The simulation results suggest that the higher the heterogeneity in the abatement benefit, the larger the IEA size and the higher the relative gains of IEAs; the degree of heterogeneity in the abatement cost has little impact on the IEA size but contributes to the relative gains of IEAs.

Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:now:jnlsbe:102.00000106

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