A MECHANISM DESIGN APPROACH TO CLIMATE-CHANGE AGREEMENTS

We take a mechanism design perspective to investigate how environmental agreements should account for multilateral externalities, incentive compatibility, and voluntary participation by sovereign countries. The optimal mechanism involves a tradeoff between a free rider problem in the effort provisio...

Full description

Saved in:
Bibliographic Details
Published in:Journal of the European Economic Association 2016-06, Vol.14 (3), p.669-718
Main Authors: Martimort, David, Sand-Zantman, Wilfried
Format: Article
Language:English
Subjects:
Agreements
D82
Economic models
Economic theory
Economics and Finance
H23
Humanities and Social Sciences
Incentives
Q54
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We take a mechanism design perspective to investigate how environmental agreements should account for multilateral externalities, incentive compatibility, and voluntary participation by sovereign countries. The optimal mechanism involves a tradeoff between a free rider problem in the effort provision of participating countries and the necessity of inducing countries to ratify the agreement. This mechanism can be approximated by a simple menu with attractive implementation and robustness properties. Limits on enforcement and commitment might nevertheless hinder the performance of this menu, making the "business as usual" scenario more likely.
ISSN:1542-4766
1542-4774
DOI:10.1111/jeea.12150