Transboundary Fire and Haze Games: Local Capture and Common Agency

Ridwan Rusli and Youngho Chang ()
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Youngho Chang: Singapore University of Social Sciences

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: We study how transboundary, intergovernmental fire and haze negotiations interact with local, subnational government collusion and capture in a decentralized country. The local go- vernment collusion and capture problem is modelled as a competing principals and common agency problem that interacts with the central government’s game of chicken. The results show that the central government can persuade farmers and prevent burning when the incre- mental benefits from slashing and burning are lower, the total direct and indirect costs and damages of fire and haze are higher and the required enforcement and abatement costs are not too high. Neighbouring governments can help mitigate the central government’s budget constraint and deter or punish violating multinational companies. We develop a multitask multiprincipal framework to expand our solution set to include partial burning outcomes and negative compensations. The results inform on a set of policy strategies to these complex transboundary fire and haze negotiation and local capture problems.

Keywords: Forest and peatland fires; mechanical clearing; slash and burn; game of chicken; multitask; multiprincipal; common agency; collusion and capture. (search for similar items in EconPapers)
JEL-codes: Q23 Q57 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-env and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:21-12

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