Doruk İriş () and
Alessandro Tavoni ()
No 239, GRI Working Papers from Grantham Research Institute on Climate Change and the Environment
We study the impact of loss-aversion and the threat of catastrophic damages, which we jointly call threshold concerns, on international environmental agreements. We aim to understand whether a threshold for dangerous climate change is an effective coordination device for countries to overcome the free-riding problem, so that they abate emissions sufficiently to avoid disaster. We focus on loss-averse countries negotiating under the threat of either high environmental damages (loss domain) or low damages (gain domain). Under symmetry, when countries display identical degrees of threshold concern, we show that such beliefs have a positive effect on reducing the emission levels of both signatories to the treaty and non-signatories, leading to weakly larger coalitions of signatories. We then introduce asymmetry, by allowing countries to differ in the degree of concern about the threat of disaster. We show that stable coalitions are mostly formed by the countries with higher threshold concerns. When enough countries have no threshold concern, coalition size may diminish, regardless of whether the other countries have mild or strong threshold concerns.
New Economics Papers: this item is included in nep-ene and nep-env
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://www.lse.ac.uk/GranthamInstitute/publication ... limate-change-games/
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:lsg:lsgwps:wp239
Access Statistics for this paper
More papers in GRI Working Papers from Grantham Research Institute on Climate Change and the Environment Contact information at EDIRC.
Bibliographic data for series maintained by The GRI Administration ().