Efficiency of uniform standards for transboundary pollution problems: a note

Basak Bayramoglu and Jean-François Jacques

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

Abstract: This note proposes an example which contradicts the idea that similar countries will negotiate an agreement on a uniform standard. It shows that strictly identical countries may have an interest in reducing their emissions differently, and not in a uniform way. This result relies on the existence of fixed costs in the abatement technology. Identical countries could be better off by signing an agreement on differentiated standards in order to exploit increasing returns to scale in the abatement activities. More specifically, one of the countries abates for both, and pays for the fixed cost of investment. In return, it is compensated by monetary transfers for this effort. We show that the level of fixed cost must be sufficiently high in this case

Keywords: Transboundary pollution; cooperative games; bargaining; standards; transfers; fixed cost (search for similar items in EconPapers)
JEL-codes: C71 Q50 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2007-05
New Economics Papers: this item is included in nep-ene, nep-env and nep-gth
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https://shs.hal.science/halshs-00159575 (application/pdf)

Related works:
Working Paper: Efficiency of Uniform Standards for Transboundary Pollution Problems: a note (2007)
Working Paper: Efficiency of Uniform Standards for Transboundary Pollution Problems: a note (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:v07031

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