International Environmental Agreements with Social Externalities: A Global Emissions Game with Asymmetric Players

Abstract

In this work we present a Global Emission Game with N asymmetric players, in which the pay-off of cooperators is affected by a Social Externality, that we assume to be a positive function. We refer to the notion of self-enforcing agreements to study the stability of the coalition and we assume that the N players are divided in two homogeneous groups, developed and developing countries. Moreover, the externality doesn't depend on emissions, but only on the number of players in coalition. So, it has no effects on the choice of optimal emissions, but only on the stability of the coalition.

Keywords: Global Emission Games, self-enforcing agreements, Social Externalities, asymmetric players

JEL Classification: C72