Transfers in international environmental agreements under heterogeneity

Qian Li and Toshiyuki Fujita

Applied Economics, 2021, vol. 53, issue 33, 3899-3910

Abstract: This paper analytically compares the effectiveness of internal and external transfers in encouraging participants in international environmental agreements (IEAs). We divide countries into two homogeneous groups: developed and developing countries. Further, we assume that strong asymmetries exist in their abatement benefits and costs. Using the non-cooperative game model of coalition formation, our result shows that both types of transfers can enlarge the size of self-enforcing coalitions, and the external transfers are always preferred.

Date: 2021
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DOI: 10.1080/00036846.2020.1861209

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