scholarly journals International Environmental Agreements with Asymmetric Countries: Climate Clubs vs. Global Cooperation

2015 ◽  
Author(s):  
Achim Hagen ◽  
Klaus Eisenack
Keyword(s):  
International Environmental Agreements ◽  
Environmental Agreements ◽  
Asymmetric Countries

CLIMATE CLUBS VERSUS SINGLE COALITIONS: THE AMBITION OF INTERNATIONAL ENVIRONMENTAL AGREEMENTS

2019 ◽  
Vol 10 (03) ◽  
pp. 1950011 ◽  
Author(s):  
ACHIM HAGEN ◽  
KLAUS EISENACK
Keyword(s):  
Theoretical Model ◽  
International Environmental Agreements ◽  
Environmental Agreements ◽  
Two Stage ◽  
Standard Case ◽  
Game Theoretical Model ◽  
Asymmetric Countries ◽  
Stage Game ◽  
Global Emissions

We investigate whether global cooperation on emissions abatement can be improved if asymmetric countries agree to sign one out of several environmental agreements. The analysis is based on a two-stage game theoretical model. Conditions for stable coalitions and the resulting global emissions are determined. We allow for multiple coalitions with all countries being different, and analyze the effects in the cases of increasing marginal damages from emissions and of decreasing marginal benefits of emissions. We find that in the case of decreasing marginal benefits and constant marginal damages, admitting multiple coalitions increases the number of cooperating countries and reduces emissions (compared to the standard case with a single coalition). For increasing marginal damages and constant marginal benefits, however, multiple stable coalitions cannot coexist. If both damages and benefits are nonlinear, admitting multiple coalitions can decrease emissions. The paper thus contributes to the emerging discussion on the scope and limits of climate clubs.

scholarly journals National political pressure groups and the stability of international environmental agreements

2020 ◽  
Author(s):  
Achim Hagen ◽  
Juan-Carlos Altamirano-Cabrera ◽  
Hans-Peter Weikard
Keyword(s):  
Home Country ◽  
International Environmental Agreements ◽  
Spillover Effects ◽  
Environmental Agreements ◽  
Political Pressure ◽  
International Spillovers ◽  
Pressure Groups ◽  
Asymmetric Countries ◽  
Reduce Emissions ◽  
The Stability

AbstractThis paper examines the effects of political pressure groups (lobbies) on transboundary emissions of individual countries and on the stability of international environmental agreements to reduce emissions. We consider two types of lobbies, industry and environmentalists, and we allow for asymmetric countries to consider differences in lobby strengths to study strategic international spillovers of national lobby activities. In our model, lobby groups in countries that are non-signatories to the agreement will impact abatement of the lobby’s home country only. In contrast, lobby activities in signatory countries have spillover effects on the abatement decisions of other member countries. As lobby strength impacts abatement, it will, in turn, impact the incentives to participate in the agreement. We find that lobby activities from both lobby groups, industry and environmentalists, can have the potential to facilitate international cooperation to abate global pollution. This, however, depends on the distribution of lobby activities across countries and on whether green lobby groups have a national or international focus.

scholarly journals Essays on the Incentives to Form International Agreements between Asymmetric Countries

2021 ◽  
Author(s):  
Natalia Bezamaternykh
Keyword(s):  
Nash Equilibria ◽  
International Environmental Agreements ◽  
Trade Agreements ◽  
Perfect Competition ◽  
Environmental Agreements ◽  
International Trade Agreements ◽  
Asymmetric Countries ◽  
Set Up ◽  
The Stability ◽  
Coalition Proof

Abstract: International Environmental Agreements suffer from a strong free-riding incentive that generally leads to failure of coalition formation in the economics literature and have been largely unsuccessful in practice. At the same time, preferential trade agreements (PTAs) have increasingly included elements not specifically related to trade, such as domestic policy over the environment, labour, intellectual property, health and investment. One area that has received a great deal of attention is deep agreements is the environment. In this dissertation, we develop three models of asymmetric countries, that include both trade and environmental externalities and study the incentives to form international trade agreements between those asymmetric countries. First, we develop a two-country, two-good model with cross-border negative spillovers and perfect competition in product markets. We compare shallow (trade only) and deep (trade and environment) trade agreements between those two large asymmetric countries, and we show that deep and shallow trade agreements have different outcomes in terms of world and individual countries welfares, trade specialization and environmental damages. Next, we develop two three-country, three-goods models, a “competing importers model” and a “competing exporters model”, and examine equilibrium agreements and environmental outcomes assuming (i) environmental agreements are negotiated separately, (ii) trade agreements are shallow, and (iii) trade agreements are deep. To examine the stability of endogenous deep and shallow trade agreements we set up various three stage games and use coalition-proof Nash equilibria refinement to circumvent the multiplicity of Nash equilibria. Furthermore, in order to examine the differences between shallow and deep trade agreements, we develop extended games where countries can choose between different deep and shallow PTAs and investigate how equilibrium agreements differ based on being deep or shallow. Therefore, in two different models of multiple asymmetric countries, we ask and answer the following questions: (i) how do equilibrium agreements differ when countries choose deep rather than shallow agreements?; (ii) given the choice between deep and shallow trade agreements, would countries prefer to incorporate an environmental clause into their equilibrium trade deal?; and (iii) what are the implications of including non-trade elements in PTAs for the pursuit of global free trade?

scholarly journals Essays on the Incentives to Form International Agreements between Asymmetric Countries

2021 ◽  
Author(s):  
Natalia Bezamaternykh
Keyword(s):  
Nash Equilibria ◽  
International Environmental Agreements ◽  
Trade Agreements ◽  
Perfect Competition ◽  
Environmental Agreements ◽  
International Trade Agreements ◽  
Asymmetric Countries ◽  
Set Up ◽  
The Stability ◽  
Coalition Proof

Abstract: International Environmental Agreements suffer from a strong free-riding incentive that generally leads to failure of coalition formation in the economics literature and have been largely unsuccessful in practice. At the same time, preferential trade agreements (PTAs) have increasingly included elements not specifically related to trade, such as domestic policy over the environment, labour, intellectual property, health and investment. One area that has received a great deal of attention is deep agreements is the environment. In this dissertation, we develop three models of asymmetric countries, that include both trade and environmental externalities and study the incentives to form international trade agreements between those asymmetric countries. First, we develop a two-country, two-good model with cross-border negative spillovers and perfect competition in product markets. We compare shallow (trade only) and deep (trade and environment) trade agreements between those two large asymmetric countries, and we show that deep and shallow trade agreements have different outcomes in terms of world and individual countries welfares, trade specialization and environmental damages. Next, we develop two three-country, three-goods models, a “competing importers model” and a “competing exporters model”, and examine equilibrium agreements and environmental outcomes assuming (i) environmental agreements are negotiated separately, (ii) trade agreements are shallow, and (iii) trade agreements are deep. To examine the stability of endogenous deep and shallow trade agreements we set up various three stage games and use coalition-proof Nash equilibria refinement to circumvent the multiplicity of Nash equilibria. Furthermore, in order to examine the differences between shallow and deep trade agreements, we develop extended games where countries can choose between different deep and shallow PTAs and investigate how equilibrium agreements differ based on being deep or shallow. Therefore, in two different models of multiple asymmetric countries, we ask and answer the following questions: (i) how do equilibrium agreements differ when countries choose deep rather than shallow agreements?; (ii) given the choice between deep and shallow trade agreements, would countries prefer to incorporate an environmental clause into their equilibrium trade deal?; and (iii) what are the implications of including non-trade elements in PTAs for the pursuit of global free trade?

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