Strategic Behavior and the Environment > Vol 1 > Issue 2

Efficient International Environmental Agreements for Correlated Transnational Pollutants in the Presence of Free Trade of Goods and International Transfers

Emilson C. D. Silva, School of Economics, Georgia Institute of Technology, USA, emilson.silva@econ.gatech.edu Xie Zhu, Department of Economics, Oakland University, USA, zhu@oakland.edu
 
Suggested Citation
Emilson C. D. Silva and Xie Zhu (2011), "Efficient International Environmental Agreements for Correlated Transnational Pollutants in the Presence of Free Trade of Goods and International Transfers", Strategic Behavior and the Environment: Vol. 1: No. 2, pp 175-197. http://dx.doi.org/10.1561/102.00000008

Published: 05 Apr 2011
© 2011 E. C. D. Silva and X. Zhu
 
Subjects
Agreements/Voluntary Agreements,  Trade,  Coalitions
 
Keywords
C72D62D78F18H41H77Q56
International environmental agreementsClimate changeAcid rainEmission permit marketsProportional equityInternational tradeCoalitions
 

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In this article:
Introduction
The Model
Potential Status Quo Settings
Efficient Environmental Policy Making
Conclusions
Appendix A
Appendix B
References

Abstract

We examine numerous settings in which large strategic nations make environmental policies in the presence of international trade and form coalitions that aim to mitigate global or continental transnational pollution. We show that every nation has incentives to internalize all emission externalities and neutralize terms-of-trade effects in various settings in which all nations belong to coalitions, the coalitions are completely interconnected and the international transfers promoted within all coalitions are proportionally equitable. Although many efficient international arrangements feature coalitions with fewer than the total number of nations, all efficient arrangements yield payoffs identical to those produced by the grand coalition.

DOI:10.1561/102.00000008