Modesty Pays: Sometimes!

39 Pages Posted: 11 Jun 2004

Date Written: April 2004

Abstract

Standard non-cooperative game theoretical models of international environmental agreements (IEAs) draw a pessimistic picture of the prospective of successful cooperation: only small coalitions are stable that achieve only little. However, there also exist IEAs with higher participation and more success. In order to explain this phenomenon, this paper departs from the standard assumption of joint welfare maximization of coalition members, implying ambitious abatement targets and strong free-riding. Instead, it considers that countries agree on modest emission reduction targets. This may sufficiently raise participation so that the success of treaties improves in terms of global emission reduction and global welfare. Thus, modesty may pay, though the first best optimum cannot be achieved.

Keywords: International environmental agreements, Internal&external stability, Modest emission reduction

JEL Classification: C72, H41, Q20

Suggested Citation

Finus, Michael, Modesty Pays: Sometimes! (April 2004). FEEM Working Paper No. 68.04. Available at SSRN: https://ssrn.com/abstract=546065 or http://dx.doi.org/10.2139/ssrn.546065

Michael Finus (Contact Author)

University of Stirling ( email )

Stirling, Scotland FK9 4LA
United Kingdom

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