FEEM working papers "Note di lavoro" series
2015 .058

International Environmental Agreements with Asymmetric Countries: Climate Clubs vs. Global Cooperation


Authors: Achim Hagen, Klaus Eisenack
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Multiple International Environmental Agreements, Coalition Formation  
JEL n.: Q54, C72

Abstract

We investigate whether global cooperation for emission abatement can be improved if asymmetric countries can sign different parallel environmental agreements. The analysis assumes a two-stage game theoretical model. Conditions for self-enforcing sets of agreements and the resulting total emission abatement are determined. We allow for multiple coalitions with multiple types of asymmetric countries. We then analyze the effect of multiple coalitions for the case of increasing marginal costs of abatement as well as for decreasing marginal benefits of abatement more generally. The results are sensitive to the assumptions on the benefits from abatement. For constant marginal benefits, the possibility of multiple agreements increases the number of cooperating countries and total abatement (compared to the standard case with a single agreement). For decreasing marginal benefits, total emissions are independent of the number of admitted agreements. The paper thus contributes to the emerging discussion on the scope and limits of climate clubs.

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Suggested citation: Hagen, A., Eisenack, K. (2015), 'International Environmental Agreements with Asymmetric Countries: Climate Clubs vs. Global Cooperation', Nota di Lavoro 58.2015, Milan, Italy: Fondazione Eni Enrico Mattei

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