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International Environmental Agreements: Emissions trade, safety valves and escape clauses

Larry Karp and Jinhua Zhao ()

Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: We explain how the structure of multi-national or multi-regional environmental agreements affect their chance of success. Trade in emissions permits has ambiguous and in some cases surprising effects on both the equilibrium level of abatement, and on the ability to persuade nations or regions to participate in environmental agreements. An escape clause policy and a safety valve policy have essentially the same properties when membership in environmental agreement is pre-determined, but they create markedly different effects on the incentives to join such an agreement. The two policies lead to a qualitative difference in the leverage that a potential member of the agreement exercises on other members.

Keywords: Kyoto Protocol; escape clause; emissions trade; cost uncertainty; participation game; International Environmental Agreement (search for similar items in EconPapers)
Date: 2012-02-14
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Related works:
Journal Article: International Environmental Agreements: Emissions Trade, Safety Valves and Escape Clauses (2010) Downloads
Working Paper: International Environmental Agreements: Emissions trade, safety valves and escape clauses (2009) Downloads
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