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Title:The dynamics of climate agreements PDF Logo
Authors:Harstad, Bård
Issue Date:2010
Series/Report no.:CESifo working paper: Empirical and Theoretical Methods 2962
Abstract:I develop a dynamic model of private provision of public bads allowing investments in technologies. The analysis is tractable and the MPE unique. The framework is used to derive optimal incomplete contracts in a dynamic setting. While the noncooperative equilibrium is very inefficient, short-term contracts can be worse due to hold-up problems. The optimal long-term contract is more ambitious if its length is relatively short and the technological spillover large. The optimal length increases in this externality. With renegotiation, the outcome is first best. The results have several implications for how to design a climate treaty.
Subjects:dynamic private provision of public goods
dynamic common pool problems
dynamic hold-up problems
incomplete contracts
contract-length
renegotiation design
climate change and climate agreements
JEL:D86
Q54
F55
F53
H87
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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