International Environmental Agreements - Stability with Transfers among Countries

Effrosyni Diamantoudi, Eftichios Sartzetakis () and Stefania Strantza
Additional contact information
Effrosyni Diamantoudi: Concordia University
Stefania Strantza: Concordia University

No 2018.20, Working Papers from Fondazione Eni Enrico Mattei

Abstract: The paper examines the stability of self-enforcing International Environmental Agreements (IEAs) among heterogeneous countries, allowing for transfers. We employ a two-stage, non-cooperative model of coalition formation. In the first stage each country decides whether or not to join the agreement, while in the second stage countries choose their emissions simultaneously. Coalition members agree also to share the gains from cooperation in the first stage. We use quadratic benefit and environmental damage functions and assume two types of countries differing in their sensitivity to the global pollutant. In examining the impact of transfers on the coalition size, we apply the notion of Potential Internal Stability (PIS). Results show that transfers can increase cooperation among heterogeneous countries. However, the increase in the coalition size, relative to the case without transfers, comes only from countries belonging to the type with the lower environmental damages, which are drawn into the coalition by the transfers offered. Furthermore, the level of cooperation increases with the degree of heterogeneity. However, the reduction in aggregate emissions achieved by the enlarged coalition is very small leading to dismal improvement in welfare, which confirms the "paradox of cooperation".

Keywords: International Environmental Agreements; Heterogeneous Countries; Transfers (search for similar items in EconPapers)
JEL-codes: Q5 Q54 (search for similar items in EconPapers)
Date: 2018-05
New Economics Papers: this item is included in nep-cdm, nep-env and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://feem-media.s3.eu-central-1.amazonaws.com/w ... oads/NDL2018-020.pdf (application/pdf)

Related works:
Working Paper: International Environmental Agreements - Stability with Transfers among Countries (2018)
Working Paper: International Environmental Agreements - Stability with Transfers among Countries (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2018.20

Access Statistics for this paper

More papers in Working Papers from Fondazione Eni Enrico Mattei Contact information at EDIRC.
Bibliographic data for series maintained by Alberto Prina Cerai ( this e-mail address is bad, please contact ).