Strategic Behavior and the Environment > Vol 10 > Issue 1-2

Supporting Environmental Agreements under Asymmetry and Minimum Participation Rule

Qian Li, Faculty of Economics, Nagoya University, Japan, Toshiyuki Fujita, Faculty of Economics, Kyushu University, Japan, tfujita@econ.kyushu-u.ac.jp , Yutian Zhang, Graduate School of Engineering, Kyushu University, Japan
 
Suggested Citation
Qian Li, Toshiyuki Fujita and Yutian Zhang (2024), "Supporting Environmental Agreements under Asymmetry and Minimum Participation Rule", Strategic Behavior and the Environment: Vol. 10: No. 1-2, pp 15-38. http://dx.doi.org/10.1561/102.00000106

Publication Date: 18 Nov 2024
© 2024 Q. Li, T. Fujita and Y. Zhang
 
Subjects
Game theory,  Environmental economics,  Public economics,  Economic theory,  Collective action,  Climate change,  Game theoretic models,  Game theory,  International relations,  Public policy
 
Keywords
JEL Codes: C72Q50
International environmental agreementscoalition formationminimum participation ruletransfersheterogeneous countries
 

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This is published under the terms of CC-BY.

In this article:
Introduction 
IEAs with Supporters 
Existence of Equilibria with Supporters 
The Impact of Heterogeneity on Equilibria 
Discussion and Conclusion 
Appendix: Proof of Proposition 1 
References 

Abstract

This study analyzes the efficiency of external transfers in international environmental agreements (IEAs) with two types of heterogeneous countries differing in abatement benefit or abatement cost parameters. We introduce a minimum participation rule concerning the number of supporters, who commit to transfer welfare to induce all the other countries to form a self-enforcing IEA. The analytical result shows that an equilibrium exists where all countries except supporters become members of the agreement under a certain condition. The simulation results suggest that the higher the heterogeneity in the abatement benefit, the larger the IEA size and the higher the relative gains of IEAs; the degree of heterogeneity in the abatement cost has little impact on the IEA size but contributes to the relative gains of IEAs.

DOI:10.1561/102.00000106