Regional Initiatives and the Cost of Delaying Binding Climate Change Agreements

Julien Beccherle and Jean Tirole
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Julien Beccherle: Ministère de l'écologie, du développement durable et de l'énergie
Jean Tirole: TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - Comue de Toulouse - Communauté d'universités et établissements de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement

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Abstract: The Kyoto and Copenhagen Protocols on climate change mitigation postponed the specification of binding commitments to a future negotiation. This paper analyzes the strategic implications of delayed negotiations. While, as is well-understood, the incentive to free ride leads to excessive emissions prior to a binding agreement, the cost of delay is magnified by players' attempt to secure a favorable bargaining position in the future negotiation. A "brinkmanship", an "effort substitution", and a "raising rival's cost" effects all concur to generate high post-agreement emissions. The paper applies this general insight to the issuance of forward or bankable permits.

Keywords: Bankable permits; Cap and trade; Climate change; International negotiations (search for similar items in EconPapers)
Date: 2011-05-13
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Published in Journal of Public Economics, 2011, 95 (11-12), pp.1339-1348. ⟨10.1016/j.jpubeco.2011.04.007⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05374317

DOI: 10.1016/j.jpubeco.2011.04.007

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