Can the International Environmental Cooperation Be Bought?

40 Pages Posted: 12 Aug 2005

See all articles by Cristina Fuentes-Albero

Cristina Fuentes-Albero

Federal Reserve Board; Rutgers University; Rutgers, The State University of New Jersey - Department of Economics

Santiago J. Rubio

University of Valencia - Department of Economic Analysis

Date Written: July 2005

Abstract

In this paper a two-stage game of international environmental agreement formation with asymmetric countries is solved. The equilibrium of the game allows to determine the number of countries interested in signing the agreement. Two cases are studied. In the first case, it is assumed that the only difference among countries is given by the abatement costs, and in the second case, by the environmental damages. In both cases, two different institutional settings, one without side payments and another with side payments, are considered. The results establish that the asymmetry assumption has no important effects on the scope of cooperation in comparison with the symmetric case if side payments are not used or the only difference among countries is given by the abatement costs. When the only difference are the environmental damages, the result is that the level of cooperation that can be bought through a self-financed side payment system increases with the degree of asymmetry.

Keywords: Self-enforcing international environmental agreements, linear environmental damages, public bads

JEL Classification: C72, D62, F02, Q20

Suggested Citation

Fuentes-Albero, Cristina and Rubio Jorge, Santiago J., Can the International Environmental Cooperation Be Bought? (July 2005). Available at SSRN: https://ssrn.com/abstract=773988 or http://dx.doi.org/10.2139/ssrn.773988

Cristina Fuentes-Albero (Contact Author)

Federal Reserve Board ( email )

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Rutgers University ( email )

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Department of Economics
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Rutgers, The State University of New Jersey - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

Santiago J. Rubio Jorge

University of Valencia - Department of Economic Analysis ( email )

Avda. de los Naranjos s/n
46022 Valencia
Spain
+34963828219 (Phone)
+34963828249 (Fax)

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