Coalition-Proof Overlapping International Green R&D Agreements

49 Pages Posted: 6 Oct 2013

See all articles by Emilson Delfino Silva

Emilson Delfino Silva

University of Alberta - Department of Marketing, Business Economics & Law

Chikara Yamaguchi

Hiroshima University

Date Written: October 4, 2013

Abstract

We examine the formation of hub-and-spoke and multilateral green technology international agreements. Green R&D provision produces two types of positive externalities, a global public good (i.e., reduction of carbon dioxide emissions) and spillovers in technology agreements. We utilize the coalition-proof concept to refine the set of Nash equilibria and identify stable coalitional structures. Multilateral and hub-and-spoke coalitional structures can be stable in the absence of income transfers, depending on the agreements’ attrition costs. Fully participated multilateral coalitional structure is not stable in the presence of income transfers; however, isolated bilateral and hub-and-spoke agreements are stable for sufficiently low attrition costs.

Keywords: coalition-proof equilibrium, overlapping coalitions, green technology, hub-and-spoke, international environmental agreements

JEL Classification: C72, D62, D78, H41, H77

Suggested Citation

Delfino Silva, Emilson and Yamaguchi, Chikara, Coalition-Proof Overlapping International Green R&D Agreements (October 4, 2013). University of Alberta School of Business Research Paper No. 2013-1312. Available at SSRN: https://ssrn.com/abstract=2336206 or http://dx.doi.org/10.2139/ssrn.2336206

Emilson Delfino Silva (Contact Author)

University of Alberta - Department of Marketing, Business Economics & Law ( email )

Edmonton, Alberta T6G 2R6
Canada

Chikara Yamaguchi

Hiroshima University ( email )

1-2-1
Kagamiyama
Higashi-Hiroshima, Hiroshima 739-8525
Japan

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