Can Uncertainty Alleviate the Commons Problem?

Yann Bramoullé and Nicolas Treich

Journal of the European Economic Association, 2009, vol. 7, issue 5, 1042-1067

Abstract: Global commons problems, such as climate change, are often affected by severe uncertainty. The paper examines the effect of uncertainty on pollution emissions and welfare in a strategic context. We find that emissions are always lower under uncertainty than under certainty, reflecting risk-reducing considerations. We show that uncertainty can have a net positive impact on the welfare of risk-averse polluters. We extend the analysis to increases in risk, increases in risk-aversion, and to risk heterogeneity. (JEL: D81, C72, Q54, H23) (c) 2009 by the European Economic Association.

JEL-codes: C72 D81 H23 Q54 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (60)

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