A Mechanism Design Approach to Climate Agreements

David Martimort and Wilfried Sand-Zantman

No 11-251, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: We analyze environmental agreements in contexts with asymmetric information, voluntary participation by sovereign countries and possibly limited enforcement. Taking a mechanism design perspective, we study how countries can agree on effort levels and compensations to take into account multilateral externalities. We delineate conditions for efficient agreements and trace out possible inefficiencies to the conjectures that countries hold following disagreement. We show how optimal mechanisms admit simple approximations with attractive implementation properties. Finally, we also highlight how limits on commitment strongly hinder performances of optimal mechanisms.

JEL-codes: D82 (search for similar items in EconPapers)
Date: 2011-08, Revised 2013-04-30
New Economics Papers: this item is included in nep-agr, nep-cdm, nep-cta, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: A Mechanism Design Approach to Climate Agreements (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:24932

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