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Information Manipulation and Climate Agreements

A refereed and revised version of this paper is published in American Journal of Agricultural Economics, 96(3), 851-861.

Posted: 22 Mar 2012 Last revised: 11 Jun 2014

Fuhai Hong

Nanyang Technological University (NTU) - Division of Economics

Xiaojian Zhao

Hong Kong University of Science & Technology (HKUST)

Date Written: March 13, 2013

Abstract

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

Suggested Citation

Hong, Fuhai and Zhao, Xiaojian, Information Manipulation and Climate Agreements (March 13, 2013). A refereed and revised version of this paper is published in American Journal of Agricultural Economics, 96(3), 851-861. . Available at SSRN: https://ssrn.com/abstract=2027390 or http://dx.doi.org/10.2139/ssrn.2027390

Fuhai Hong (Contact Author)

Nanyang Technological University (NTU) - Division of Economics ( email )

Singapore, 639798
Singapore

Xiaojian Zhao

Hong Kong University of Science & Technology (HKUST) ( email )

999999

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