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Title:Sticks and carrots for the design of international climate agreements with renegotiations PDF Logo
Authors:Weikard, Hans-Peter
Dellink, Rob B.
Issue Date:2008
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: CTN, Coalition theory network 2008,26
Abstract:This paper examines stability of international climate agreements for carbon abatement under an optimal transfer rule and renegotiations. The optimal transfer rule suggested to stabilise international environmental agreements (Weikard 2005, Carraro, Eyckmans and Finus 2006) is no longer optimal when agreements are renegotiated. We determine the conditions for optimal self-enforcing sequences of agreements. If these conditions are met, then transfer payments can be arranged such that no country wants to change its membership status at any stage. In order to demonstrate the applicability of our condition we use the STACO model, a 12-regions global model, to assess the impact of welldesigned transfer rules on the stability of an international climate agreement. Although there are strong free-rider incentives, we find a stable grand coalition in the first commitment period in a game with one round of renegotiations.
Subjects:Stability of Coalitions
International Environmental Agreements
Partition Function Approach
Sharing Rules
Optimal Transfers
Renegotiations
JEL:C72
D62
H41
H77
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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