Self-Enforcing Agreements Under Unequal Nationally Determined Contributions

28 Pages Posted: 6 Jan 2016

See all articles by Emilson Delfino Silva

Emilson Delfino Silva

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

Multiple version iconThere are 3 versions of this paper

Date Written: January 4, 2016

Abstract

For a large global economy, containing at least 195 nations, with normal goods, and an unequal world income distribution, we consider the endogenous formation and stability of an international environmental agreement (IEA) under nationally determined contributions (NDCs). Nations share green R&D efforts and enjoy R&D spillovers if they join an IEA. Nonmembers do not enjoy R&D spillovers. We show that the Grand Coalition is stable under NDCs if all nations are active carbon abatement and R&D contributors. If some nations are inactive, because they lack sufficient income to provide carbon abatement and R&D, the stable coalition under NDCs is the coalition of all active (wealthier) nations. For comparison purposes, we also show that if IEAs are subject to collectively determined contributions, the stable coalition structure is the stand-alone one.

Keywords: International environmental agreements, self-enforcing, nationally determined contributions, R&D sharing

JEL Classification: D74, F53, H41, Q54, Q55

Suggested Citation

Delfino Silva, Emilson, Self-Enforcing Agreements Under Unequal Nationally Determined Contributions (January 4, 2016). University of Alberta School of Business Research Paper No. 2016-701. Available at SSRN: https://ssrn.com/abstract=2710944 or http://dx.doi.org/10.2139/ssrn.2710944

Emilson Delfino Silva (Contact Author)

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

Edmonton, Alberta T6G 2R6
Canada

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