Toward Farsightedly Stable International Environmental Agreements

The stability of International Environmental Agreements (IEA) is analyzed by using game theory. The integrated assessment model FUND provides the cost-benefit payoff functions of pollution abatement for sixteen different world regions. The farsighted stability concept of Chwe (1994) is used and solved by combinatorial algorithms. Farsighted stability assumes perfect foresight of the players and predicts which coalitions can be formed when players are farsighted. All farsightedly stable coalitions are found, and their improvement to environment and welfare is considerable. The farsightedly stable coalitions are refined further to preferred farsightedly stable coalitions, which are coalitions where the majority of coalition members reach higher profits in comparison with any other farsightedly stable coalitions. Farsightedly stable coalitions contribute more to the improvement of environment and welfare in comparison to D'Aspremont et al.'s (1983) stable ones. Considering multiple farsighted stable coalitions, participation in coalitions for environmental protection is significantly increased, which is an optimistic result of our game theoretical model.     

International Environmental Agreements and Black Technology

Environmental and Resource Economics - This paper analyzes the stability of international environmental agreements in a dynamic game when the generation of both renewables and fossil fuel based...     

International Environmental Agreements under Endogenous Uncertainty

This paper explores the implications of the possibility of a shift in environmental damages on the participation in environmental treaties. Using a two‐period model where the probability of a regime shift increases in the first‐period pollution stock, we examine the issue of coalition formation under both fixed and dynamic membership. Our analysis suggests that endogenous uncertainty may increase participation. We find that full cooperation may be sustained, but only in the presence of endogenous uncertainty. Interestingly, when the shift in the environmental damage is large enough, the model provides a way to solve the “puzzle of small coalitions” found in the literature related to international environmental agreements. We also find that in period 1 (period 2) endogenous uncertainty leads to a lower (higher) pollution stock under dynamic membership as compared to the fixed membership case.     

International Environmental Agreements as Evolutionary Games

This paper applies evolutionary game theory to international environmental agreements (IEAs). Contrary to stage game models (Barrett in J Theor Politics 11:519–541, 1999, Eur Econ Rev 45:1835–1850, 2001), in an evolutionary equilibrium (EE) no signatory prefers to be outside the IEA and the EE is robust to trembles. With two populations, there is a unique interior EE when there is decreasing returns to abatement and small asymmetry in the externality differences across populations. At the interior EE, transfers from the poor to the rich can increase payoffs for all nations, but come at the expense of greater payoff inequality. Transfers can also eliminate the basin of attraction for the payoff inferior EE with decreasing returns to abatement and large asymmetry. Thus IEAs, such as the Kyoto Treaty, predicated on the polluter-pays and ability-to-pay principles may result in Pareto inferior outcomes.     

A Dynamic Model for International Environmental Agreements

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).     

International Environmental Agreements and Strategic Voting*

This paper explores the outcome of an international environmental agreement when the governments are elected by their citizens. It also considers a voter's incentives for supporting candidates who are less green than she is. In the extreme case of “global” pollution, the elected politicians pay no attention to the environment, and the resulting international agreement is totally ineffective. Moreover, if governments cannot negotiate and have to decide non‐cooperatively (and voters are aware of this), the elected politicians can be greener, ecological damage can be lower and the median voter's payoff can be higher than in the case with bargaining.     

Financial Mechanism and Enforceability of International Environmental Agreements

We examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods. In the present model, the forces creating international agreement are a politician??s motive for re-election and a financial mechanism for compliance. If a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement, and is aware that his ex post deviation will be deterred by the financial mechanism, he too decides to participate in the agreement, which then corrects externality problems.     

Self-enforcing International Environmental Agreements with Costly Monitoring for Compliance

Theoretical analyses of international environmental agreements (IEAs) have often employed the concept of self-enforcing agreements to predict the number of parties to such an agreement. The term self-enforcing, however, is a bit misleading. The concept refers to the stability of cooperative agreements, not to enforcing compliance with these agreements once they are in place. In this paper we analyze an IEA game in which parties to an agreement finance an independent monitor who audits the compliance performance of the members of an agreement. These audits reveal instances of noncompliance so they can be sanctioned. We find that costly monitoring of compliance limits the circumstances under which international cooperation to protect the environment is worthwhile, but when IEAs do form they will often involve greater participation than IEAs that do not require costly monitoring. Consequently, costly monitoring of IEAs can produce higher international environmental quality. Moreover, under certain conditions, aggregate welfare is higher when IEAs require costly monitoring.      

Uncertainty,Learning and Heterogeneity in International Environmental Agreements

This paper concerns the formation of International Environmental Agreements under uncertainty about environmental damage with different models of learning (complete learning, partial learning or no learning). The results of the existing literature are generally pessimistic: the possibility of either complete or partial learning generally reduces the level of global welfare that can be achieved from forming an IEA relative to no learning. That literature regards uncertainty as a parameter common to all countries, so that countries are identical ex ante as well as ex post. In this paper we extend the literature to the case where there is no correlation between damage costs across countries; each country is uncertain about a particular parameter (in our case the benefit-cost ratio) drawn from a common distribution but, ex post, each country’s realized parameter value is independently drawn. Consequently, while countries remain identical ex ante, they may be heterogeneous ex post. We show that this change reinforces the negative conclusions about the effects of partial learning on international environmental agreements, but, under certain conditions, moderates the negative conclusions about the effects of complete learning.     

Cleaner Technologies and the Stability of International Environmental Agreements

This paper shows that if countries are farsighted when deciding whether to defect from a coalition, then the implementation of cleaner technologies, as embodied by a reduction in the emission per output ratio, may either improve or jeopardize the chances of reaching an international environmental agreement. A small change in the emission per output ratio can result in a discrete jump in the stable size of a coalition and global welfare evaluated under the stable coalition size. In the case of three countries, the grand coalition may be destabilized by the implementation of cleaner technologies, ultimately resulting in higher global emissions and lower global welfare. In the case of more than three countries, implementing cleaner technologies may result in a discrete jump, either upward or downward, of the largest stable coalition size and welfare. We examine both, the case of a flow and that of a stock pollutant. In the latter case, we show that the higher the stock of pollution at the instant when the cleaner technology is implemented, the more likely that a grand coalition of three countries is destabilized. Measures that enhance the natural rate of decay of stock pollutants are shown to have similar effects on the size of stable coalitions to reductions in the emission per output ratio.     

国际环境协定的经济学分析及对国际经济的影响

随着世界经济的飞速发展,环境污染和生态破坏日益全球化.世界各国纷纷签订各种国际环境协定,希望通过加强国际合作,共同采取措施来解决全球环境问题.本文对国际环境双边和多边协定的制定和签署进行了经济效应分析,指出国际环境协定的实施将对各国总体的经济福利、国际资本流动、各国国际竞争力、产业结构调整以及环保科技进步等方面产生深远的影响.     

The Welfare Synergy of Bundling International Environmental Agreements with International Trade Treaties

This paper examines whether linking environmental cooperation with international trade agreements improves the welfare of the participating countries and allows countries to move closer to free trade compared with trade‐only agreements. The model is an infinitely repeated game with the threat of reversion to Nash equilibrium if an economy deviates from the cooperative agreement. It is found that such a synergy exists in a symmetric two‐country model with two goods, both emitting pollutants even when the externalities have local impact. A combination of analytic and numerical simulation analysis is used to derive the conclusions.     

Endogenous Money: An Analytical Approach

The paper proposes a constructive interpretation of the Post Keynesian debate between horizontalists and structuralists. Both approaches defend an endogenous money theory, but they discriminate between different analyses of the credit market and the reserve market. A more general model encompassing both approaches is presented here and some of its implications are discussed.     

国际投资协定中的环境条款述评

近年来,越来越多的国际投资协定开始纳入环境条款。这些条款包含概括性地提及环境保护的条款、确认缔约国采取环境规制措施的权利以及不降低环境标准的义务的条款、例外条款、环境保护的程序性条款、处理投资协定与环境协定的关系的条款、有关投资者及其投资的环境义务的条款等类型;这些环境条款的内容也更加具体,约束力有所增强,发展中国家也更多参与,并出现了从约束国家到约束跨国公司的萌芽。然而,这些环境条款的弱点也非常明显,不仅从总体上环境条款的数量不足,而且现存条款也具有效力不高、用语软弱等等弱点,使得大多数环境条款只能处于"软法"地位。