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The case of two self-enforcing international agreements for environmental protection with asymmetric countries

journal contribution
posted on 2023-06-08, 11:04 authored by Dritan Osmani, Richard TolRichard Tol
Non-cooperative game theoretical models of self-enforcing international environmental agreements (IEAs) that employ the cartel stability concept of D'Aspremont et al. (Can J Econ 16:17-25, 1983) frequently assume that countries are identical, and they can sign a single agreement only. We modify the assumption by considering two self-enforcing IEAs and also two types of asymmetric countries. Extending a model of Barrett (Oxford Econ Pap 46:878-894, 1994), we demonstrate that there are similarities between one and two self-enforcing IEAs. But in the case of few countries and high environmental damage we show that two self-enforcing IEA work far better than one self-enforcing IEA in terms of both welfare and environmental quality. Our simulation shows that only if all countries that have fewer benefits and higher cost from pollution abatement must build one coalition, there is hope that two myopic stable coalition can be formed. Moreover, if the cost-benefit functions of pollution abatement impose that the first myopic coalition is formed by countries, which have higher benefits and lower cost from pollution abatement, then two IEA's worsen abatement and welfare in comparison to one IEA. But, if the first myopic coalition is formed by countries, which have smaller benefits and higher cost from pollution abatement, then two IEA's improve abatement and welfare in comparison to one IEA.

History

Publication status

  • Published

Journal

Computational Economics

ISSN

0927-7099

Publisher

Springer Verlag

Issue

2

Volume

36

Page range

93-119

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2012-04-17

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