Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101644
Authors: 
Schmidt, Carsten
Year of Publication: 
1997
Series/Report no.: 
Diskussionsbeiträge: Serie II, Sonderforschungsbereich 178 "Internationalisierung der Wirtschaft", Universität Konstanz 350
Abstract: 
The paper explores the prospects for international environmental cooperation in a context of limited enforcement, if we allow for side-payments between countries and sequential moves in the implementation of the agreement. The framework of the analysis is a static model of heterogenous countries formulated in terms of costs and benefits of emission abatements. Taking the noncooperative Nash equilibrium as starting-point for negotiations, a mechanism is analysed that uses self-financed transfers as an instrument to create and enforce an international environmental agreement. Two kinds of side-payments are considered: transfers that are self-financed but otherwise unrestricted, and transfers that are restricted to compensations for cost-effectiveness of abatements. Numerical simulations for the different scenarios considered illustrate the gains from cooperation that can be achieved with this mechanism.
JEL: 
D61
D62
H77
Q20
Q28
Document Type: 
Working Paper

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