Participation and Duration of Environmental Agreements / Marco Battaglini, Bård Harstad.

Format:

Book

Author/Creator:

Battaglini, Marco.

Contributor:

National Bureau of Economic Research.

Harstad, Bård.

Series:

Working Paper Series (National Bureau of Economic Research) no. w18585.

NBER working paper series no. w18585

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2012.

Summary:

We analyze participation in international environmental agreements (IEAs) in a dynamic game where countries pollute and invest in green technologies. If complete contracts are feasible, participants eliminate the hold-up problem associated with their investments; however, most countries prefer to free-ride rather than participate. If investments are non-contractible, countries face a hold-up problem every time they negotiate; but the free-rider problem can be mitigated and significant participation is feasible. Participation becomes attractive because only large coalitions commit to long-term agreements that circumvent the hold-up problem. Under well-specified conditions even the first-best outcome is possible when the contract is incomplete. Since real-world IEAs fit in the incomplete contracting environment, our theory may help explaining the rising importance of IEAs and how they should be designed.

Notes:

Print version record

December 2012.