October 17, 2010

The Case of two Self-Enforcing International Agreements for Environmental Protection with Asymmetric Countries

by Dritan Osmani and Richard S.J. Tol

- Non-cooperative game theoretical models of self-enforcing international environmental agreements (IEAs) that employ the cartel stability concept of d'Aspremont et al. (1983) frequently assume that countries are identical, and they can sign a single agreement only. We modify the assumption by considering two self-enforcing IEAs and also two types of asymmetric countries. Extending a model of Barrett (1994), we demonstrate that there are similarities between one and two self-enforcing IEAs. But in the case of few countries and high environmental damage we show that two self-enforcing IEA work far better than one self-enforcing IEA in terms of both welfare and environmental quality.

Osmani, D. and R.S.J. Tol (2010). "The Case of two Self-Enforcing International Agreements for Environmental Protection with Asymmetric Countries." Working Paper FNU 1871, Hamburg University and Centre for Marine and Atmospheric Science, Jun 2010.