A Mechanism Design Approach to Climate-Change Agreements

David Martimort and Wilfried Sand-Zantman

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Abstract: We take a mechanism design perspective to investigate how environmental agreements should account for multilateral externalities, incentive compatibility, and voluntary participation by sovereign countries. The optimal mechanism involves a tradeoff between a free rider problem in the effort provision of participating countries and the necessity of inducing countries to ratify the agreement. This mechanism can be approximated by a simple menu with attractive implementation and robustness properties. Limits on enforcement and commitment might nevertheless hinder the performance of this menu, making the "business as usual" scenario more likely.

Keywords: environmental; taxes (search for similar items in EconPapers)
Date: 2016-09
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Citations: View citations in EconPapers (27)

Published in Journal of the European Economic Association, 2016, 16 (3), pp.669-718. ⟨10.1111/jeea.12150⟩

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Related works:
Journal Article: A MECHANISM DESIGN APPROACH TO CLIMATE-CHANGE AGREEMENTS (2016)
Journal Article: A Mechanism Design Approach to Climate-Change Agreements (2016)
Working Paper: A Mechanism Design Approach to Climate-Change Agreements (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01513309

DOI: 10.1111/jeea.12150

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