Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/79653
Authors: 
Bos, Olivier
Roussillon, Béatrice
Schweinzer, Paul
Year of Publication: 
2013
Series/Report no.: 
CESifo Working Paper 4345
Abstract: 
We propose a simple mechanism providing incentives to reduce harmful emissions to their efficient level without infracting upon productive efficiency. The mechanism employs a contest creating incentives among participating nations to simultaneously exert efficient productive and efficient abatement efforts. Participation in the most stylised form of the scheme is voluntary and individually rational; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive which may serve as effective rationale for the (gradual) formation of International Environmental Agreements.
Subjects: 
climate policy
contests
agreements
efficiency
JEL: 
C70
D70
H40
Q50
Document Type: 
Working Paper

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