Dynamic Models for International Environmental Agreements

Posted: 14 May 2008

See all articles by Michèle Breton

Michèle Breton

HEC Montreal - Department of Management Sciences

Lucia Sbragia

HEC Montreal

Georges Zaccour

HEC Montreal - Department of Decision Sciences

Date Written: March 2008

Abstract

In this paper we develop a model to analyze, in a dynamic framework, how countries join international environmental agreements (IEAs). In the model, where countries suffer from the same environmental damage as a result of the total global emissions, a non-signatory country decides its emissions by maximizing its own welfare, whereas a signatory country decides its emissions by maximizing the aggregate welfare of all signatory countries. Signatory countries are assumed to be able to punish the non-signatories at a cost. When countries decide on their pollution emissions they account for the evolution of the pollution over time. Moreover, we propose a mechanism to describe how countries reach a stable IEA. The model is able to capture situations with partial cooperation in an IEA stable over time. It also captures situations where all countries participate in a stable agreement, or situations where no stable agreement is feasible. When more than one possibility coexists, the long-term outcome of the game depends on the initial conditions (i.e. the size of the initial group of signatory countries and the pollution level.

Keywords: International Environmental Agreements, Non‐Cooperative Dynamic Game, Coalition Stability

JEL Classification: C73, Q53

Suggested Citation

Breton, Michèle and Sbragia, Lucia and Zaccour, Georges, Dynamic Models for International Environmental Agreements (March 2008). FEEM Working Paper No. 33.2008. Available at SSRN: https://ssrn.com/abstract=1117973 or http://dx.doi.org/10.2139/ssrn.1117973

Michèle Breton (Contact Author)

HEC Montreal - Department of Management Sciences ( email )

Montreal, Quebec H3T 2A7
Canada
514-340-6490 (Phone)
514-340-5634 (Fax)

Lucia Sbragia

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

Georges Zaccour

HEC Montreal - Department of Decision Sciences ( email )

HEC Montreal
3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3 H3T 2A7
Canada

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