Self-Enforcing Environmental Agreements and International Trade

Thomas Eichner and Rüdiger Pethig

No 4125, CESifo Working Paper Series from CESifo

Abstract: In the basic model of the literature on international environmental agreements (IEAs) (Barrett 1994; Rubio and Ulph 2006) the number of signatories of self-enforcing IEAs does not exceed three, if non-positive emissions are ruled out. We extend that model by introducing a composite consumer good and fossil fuel that are produced and consumed in each country and traded on world markets. When signatory countries act as Stackelberg leader and emissions are positive, the size of stable IEAs may be significantly larger in our model with international trade. This would be good news if larger self-enforcing IEAs would lead to stronger reductions of total emissions. Unfortunately, in the presence of self-enforcing IEAs total emissions turn out to be only slightly less than in the business as usual scenario, independent of the number of signatories. We also investigate the role of international trade by comparing our free-trade results with the outcome in the regime of autarky. Our autarky model turns out to coincide with the basic model of the literature alluded to above. We contribute to that literature by showing that in autarky the outcome of self-enforcing IEAs is also almost the same as in business as usual.

Keywords: international trade; self-enforcing environmental agreements; Stackelberg equilibrium (search for similar items in EconPapers)
JEL-codes: C72 F02 Q50 Q58 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

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Related works:
Journal Article: Self-enforcing environmental agreements and international trade (2013)
Working Paper: Self-enforcing environmental agreements and international trade (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_4125

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