Information Manipulation and Climate Agreements
Nanyang Technological University (NTU) - Division of Economics
Hong Kong University of Science & Technology (HKUST)
March 13, 2013
A refereed and revised version of this paper is published in American Journal of Agricultural Economics, 96(3), 851-861.
It appears that news media and some pro-environment organizations have the tendency to accentuate or even exaggerate the damage caused by climate change. This paper provides a rationale for it using a modified International Environmental Agreement (IEA) model with asymmetric information. We find that the information manipulation has an instrumental value, as it ex post induces more countries to participate in an IEA, which eventually enhances global welfare. From the ex ante point of view, however, the impact of such information manipulation on the level of participation in an IEA and welfare is ambiguous.
Keywords: Asymmetric Information, Information Transmission, Climate Change, International Environmental Agreements
JEL Classification: D82, L82, Q54
Date posted: March 22, 2012 ; Last revised: June 11, 2014