A Dynamic Model for International Environmental Agreements |
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Authors: | Michèle Breton Lucia Sbragia Georges Zaccour |
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Institution: | 1.GERAD and HEC Montréal,Montréal,Canada;2.GERAD and Durham University,Durham,UK;3.GERAD and Chair in Game Theory & Management, HEC Montréal,Montréal,Canada |
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Abstract: | In this paper we develop a model that uses a dynamic framework to analyze the process through which countries join international
environmental agreements (IEAs). In the model, while all countries suffer from the same environmental damage as a result of
total global emissions, non-signatory countries decide on their emission levels by maximizing their own welfare, whereas signatory
countries decide on their emission levels by maximizing the aggregate welfare of all signatory countries. It is assumed that
signatory countries will be able to punish non-signatories, at some cost to themselves. When countries decide on their pollution
emissions, they account for the evolution of the stock of pollution over time. Moreover, we propose a mechanism to describe
how countries reach a stable IEA. The model is able to capture situations characterized by partial cooperation within an IEA
that is stable over time. It also captures situations where all countries participate in a stable agreement, and situations
where no stable agreement is feasible. Where more than one possibility coexist, the long-term outcome of the game depends
on the initial conditions (i.e., the initial number of signatory countries and pollution level). |
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