Self-enforcing international environmental agreements with a stock pollutant

Santiago Rubio and Begoña Casino ()

Spanish Economic Review, 2005, vol. 7, issue 2, 89-109

Abstract: In this paper the stability of an International Environmental Agreement (IEA) among N identical countries that emit a pollutant are studied using a two-stage game. In the first stage each country decides noncooperatively whether or not to join an IEA, and in the second stage signatories jointly against nonsignatories determine their emissions in a dynamic setting defined in continuous time. A numerical simulation shows that a bilateral coalition is the unique self-enforcing IEA independently of the gains coming from cooperation and the kind of strategies played by the agents (open-loop or feedback strategies). We have also studied the effects of a minimum participation clause finding that for this case a self-enforcing IEA just consists of the number of countries established in the clause. Copyright Springer-Verlag Berlin/Heidelberg 2005

Keywords: International environmental agreements; Stock externalities; Differential games; Open-loop Nash equilibrium (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s10108-005-0098-6

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