Solving the GlobalWarming Problem: Beyond Markets, Simple Mechanisms May Help!

Martimort, David and Sand-Zantman, Wilfried (2013) Solving the GlobalWarming Problem: Beyond Markets, Simple Mechanisms May Help! Canadian Journal of Economics, 46 (2). pp. 361-378.

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Official URL: http://tse-fr.eu/pub/26666

Abstract

This paper discusses the feasibility and performances of simple mechanisms to implement international environmental agreements in the multilateral externalities context of global warming. Asymmetric information and voluntary participation by sovereign and heterogeneous countries are key constraints on the design of those agreements. Mechanisms must prevent two sorts of free-riding problems – free riding in effort provision and free riding in participation. As markets might fail to solve simultaneously those two problems, we construct instead a simple menu of options that trades off the provision of incentives for participating countries and the provision of incentives to participate. With such a mechanism, all countries voluntarily contribute to a fund, although at different intensities, but only the most efficient ones effectively reduce their pollution below its ‘business as usual’ level.

Item Type: Article
Language: English
Date: May 2013
Refereed: Yes
Subjects: B- ECONOMIE ET FINANCE
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:32
Last Modified: 07 Mar 2018 13:22
OAI ID: oai:tse-fr.eu:26666
URI: http://publications.ut-capitole.fr/id/eprint/15474

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