Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119655
Authors: 
Ohl, Cornelia
Year of Publication: 
2002
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 42.2002
Abstract: 
Strategies of international risk management, as the implementation of tradable emission permits, feed back to the incentive structure of a treaty, like the Kyoto Protocol. Discussing the Kyoto Protocol the question was: Should there be any restrictions on the trading of emission permits or not? With the help of a simple two country model it is shown that the enforcement of environmental treaties critically depends on the type and the intensity of national risk preferences. Assuming that the 'global alliance of risk' decreases with each co-operative contribution, risk aversion is a prerequisite for enhancing the chances of global risk management. It is moreover the national intensity of risk aversion that determines whether trade should be restricted or not. In some cases the chances of international coalition formation are expected to improve only if less risk averse countries dictate the rules of the game, here: the design of the permit regime.
Subjects: 
Environmental co-operation
country-specific risk preferences
game theoretic approach
typology of co-operative behaviour
design of emission permits
JEL: 
D7
D8
F1
H4
Q2
Document Type: 
Working Paper

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