Signaling in international environmental agreements: the case of early and delayed action

Michael Jakob () and Kai Lessmann

International Environmental Agreements: Politics, Law and Economics, 2012, vol. 12, issue 4, 309-325

Abstract: This paper presents a stylized international environmental agreements game with two regions differing in their preference for environmental quality. If side payments are allowed, cooperation can increase the payoffs accruing to both regions. However, cooperation can be impeded by asymmetric information about the regions’ types and only become feasible once a region has credibly revealed its type. We show how in a two-stage game early (delayed) action can act as a credible signal to reveal private information on high (low) benefits. Yet, the cooperative solution with asymmetric information is Pareto-dominated by the outcome with perfect information. Copyright Springer Science+Business Media B.V. 2012

Keywords: International environmental agreements; Climate policy; Asymmetric information; Signaling game (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s10784-012-9170-5

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