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|Title:||International Environmental Agreements and Trading Blocks — Can Issue Linkage Enhance Cooperation?|
Sartzetakis, Eftichios S.
|Subjects:||FRASCATI::Social sciences::Economics and Business::Economics|
FRASCATI::Social sciences::Economics and Business::Economics
|Source:||Strategic Behavior and the Environment|
|Abstract:||This paper examines the effect of designing international agreements that jointly determine environmental and trade policies on the participation level and aggregate welfare. This paper builds on the non-cooperative game approach of the International Environmental Agreements (IEAs) literature extending the basic model by introducing firms that trade in a global market. Countries choose the level of a tax on emissions and a tariff on imports: signatories enjoy tariff-free trade among themselves, impose a tariff to nonsignatories and a common emissions tax; nonsignatories levy a tariff on imports and a tax on domestic emissions. Resorting to numerical simulations, the paper shows increased participation to the joint agreement of around 70% of the total number of countries. These coalitions are not only much larger than the two-country coalition derived in the case without trade, but they also achieve substantial welfare improvements of around 60% of the welfare improvement the grand coalition provides over the coalition of two. The paper presents a series of numerical simulations to confirm the robustness of these results to changes in the parameters values.|
|Appears in Collections:||Department of Economics |
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