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Stable International Environmental Agreements: An Analytical Approach
Author(s) -
DIAMANTOUDI EFFROSYNI,
SARTZETAKIS EFTICHIOS S.
Publication year - 2006
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/j.1467-9779.2006.00262.x
Subject(s) - welfare , economics , variable (mathematics) , microeconomics , monotonic function , econometrics , mathematics , market economy , mathematical analysis
In this paper we examine the formation of international environmental agreements (IEAs). We show that the welfare of the signatories does not increase monotonically with respect to the number of signatories. We provide an analytical solution of the leadership model. In particular, we find that if the number of countries is greater than four then there exists a unique stable IEA with either two, three, or four signatories. Furthermore, we show that the welfare of the signatories is almost at its lowest level when the IEA is stable . While in our model each country's choice variable is emissions, we extend our results to the case where the choice variable is abatement efforts.