No CrossRef data available.
Article contents
Designing the Optimal International Climate Agreement with Variability in Commitments
Published online by Cambridge University Press: 24 September 2021
Abstract
We analyze the design of an international climate agreement. In particular, we consider two goals of such an agreement: overcoming free-rider problems and adjusting for differences in mitigation costs between countries. Previous work suggests that it is difficult to achieve both of these goals at once under asymmetric information because countries free ride by exaggerating their abatement costs. We argue that independent information collection (investigations) by an international organization can alleviate this problem. In fact, though the best implementable climate agreement without investigations fails to adjust for individual differences even with significant enforcement power, a mechanism with investigations allows adjustment and can enable implementation of the socially optimal agreement. Furthermore, when the organization has significant enforcement power, the optimal agreement is achievable even with minimal investigative resources (and vice versa). The results suggest that discussions about institutions for climate cooperation should focus on information collection as well as enforcement.
- Type
- Research Note
- Information
- Copyright
- Copyright © The IO Foundation 2021
References
Baldwin, Elizabeth, Carley, Sanya, Brass, Jennifer, and MacLean, Lauren. 2016. Global Renewable Electricity Policy: A Comparative Policy Analysis of Countries by Income Status. Journal of Comparative Policy Analysis 19 (3):277–98.Google Scholar
Barrett, Scott. 1994. Self-Enforcing International Environmental Agreements. Oxford Economic Papers 46:878–94.CrossRefGoogle Scholar
Barrett, Scott. 2003. Environment and Statecraft: The Strategy of Environmental Treaty-Making. Oxford University Press.CrossRefGoogle Scholar
Barrett, Scott, and Nitze, Paul H.. 2007. Why Cooperate? The Incentive to Supply Global Public Goods. Oxford University Press.CrossRefGoogle Scholar
Becker, Gary S. 1968. Crime and Punishment: An Economic Approach. Journal of Political Economy 76 (2):169–217.CrossRefGoogle Scholar
Bernauer, Thomas. 2013. Climate Change Politics. Annual Review of Political Science 16 (1):421–48.CrossRefGoogle Scholar
Boockmann, Bernhard, and Thurner, Paul W.. 2006. Flexibility Provisions in Multilateral Environmental Treaties. International Environmental Agreements: Politics, Law and Economics 6 (2):113–35.CrossRefGoogle Scholar
Cirone, Alexandra E., and Urpelainen, Johannes. 2013. Trade Sanctions in International Environmental Policy: Deterring or Encouraging Free Riding? Conflict Management and Peace Science 30 (4):309–34.CrossRefGoogle Scholar
Clapp, Jennifer, and Dauvergne, Peter. 2011. Paths to a Green World: The Political Economy of the Global Environment. 2nd ed. MIT Press.Google Scholar
Copelovitch, Mark S. 2010. Master or Servant? Common Agency and the Political Economy of IMF Lending. International Studies Quarterly 54 (1):49–77.CrossRefGoogle Scholar
Csapó, Gergely, and Müller, Rudolf. 2013. Optimal Mechanism Design for the Private Supply of a Public Good. Games and Economic Behavior 80:229–42.CrossRefGoogle Scholar
Dai, Xinyuan. 2007. International Institutions and National Policies. Cambridge University Press.CrossRefGoogle Scholar
Dannenberg, Astrid, Sturm, Bodo, and Vogt, Carsten. 2010. Do Equity Preferences Matter for Climate Negotiators? An Experimental Investigation. Environmental and Resource Economics 47 (1):91–109.CrossRefGoogle Scholar
Finnemore, Martha, and Jurkovich, Michelle. 2014. Getting a Seat at the Table: The Origins of Universal Participation and Modern Multilateral Conferences. Global Governance: A Review of Multilateralism and International Organizations 20 (3):361–73.CrossRefGoogle Scholar
Gilligan, Michael J., and Johns, Leslie. 2012. Formal Models of International Institutions. Annual Review of Political Science 15 (1):221–43.CrossRefGoogle Scholar
Goldstein, Judith, and Martin, Lisa L.. 2000. Legalization, Trade Liberalization, and Domestic Politics: A Cautionary Note. International Organization 54 (3):603–32.CrossRefGoogle Scholar
Harrison, Rodrigo, and Lagunoff, Roger. 2017. Dynamic Mechanism Design for a Global Commons. International Economic Review 58 (3):751–82.CrossRefGoogle Scholar
Harstad, Bård. 2018. Pledge-and-Review Bargaining. CESifo Working Paper 7296, Center for Economic Studies, Munich.CrossRefGoogle Scholar
Helfer, Laurence R. 2012. Flexibility in International Agreements. In Interdisciplinary Perspectives on International Law and International Relations: The State of the Art, edited by Dunoff, Jeffrey L. and Pollack, Mark A., 175–96. Cambridge University Press.CrossRefGoogle Scholar
Herzing, Mathias. 2005. Essays on Uncertainty and Escape in Trade Agreements. PhD diss., Stockholm University.Google Scholar
Hovi, Jon, Sprinz, Detlef F., Sælen, Håkon, and Underdal, Arild. 2019. The Club Approach: A Gateway to Effective Climate Cooperation? British Journal of Political Science 49 (3):1071–96.CrossRefGoogle Scholar
Hovi, Jon, Sprinz, Detlef F., and Underdal, Arild. 2009. Implementing Long-Term Climate Policy: Time Inconsistency, Domestic Politics, International Anarchy. Global Environmental Politics 9 (3):20–39.CrossRefGoogle Scholar
Hovi, Jon, Ward, Hugh, and Grundig, Frank. 2015. Hope or Despair? Formal Models of Climate Cooperation. Environmental and Resource Economics 62 (4):665–88.CrossRefGoogle Scholar
Karp, Larry, and Zhao, Jinhua. 2010. International Environmental Agreements: Emissions Trade, Safety Valves and Escape Clauses. Revue économique 61 (1):153–82.CrossRefGoogle Scholar
Kennard, Amanda. 2021. My Brother's Keeper: Other-Regarding Preferences and Concern for Global Climate Change. Review of International Organizations 16:345–76.CrossRefGoogle Scholar
Keohane, Robert O., and Victor, David G.. 2011. The Regime Complex for Climate Change. Perspectives on Politics 9 (1):7–23.CrossRefGoogle Scholar
Keohane, Robert O., and Victor, David G.. 2016. Cooperation and Discord in Global Climate Policy. Nature Climate Change 6 (6):570–75.CrossRefGoogle Scholar
Koremenos, Barbara. 2001. Loosening the Ties that Bind: A Learning Model of Agreement Flexibility. International Organization 55 (2):289–325.CrossRefGoogle Scholar
Koremenos, Barbara. 2005. Contracting Around International Uncertainty. American Political Science Review 99 (4):549–65.CrossRefGoogle Scholar
Koremenos, Barbara, Lipson, Charles, and Snidal, Duncan. 2001. The Rational Design of International Institutions. International Organization 55 (4):761–99.CrossRefGoogle Scholar
Kucik, Jeffrey, and Reinhardt, Eric. 2008. Does Flexibility Promote Cooperation? An Application to the Global Trade Regime. International Organization 62 (3):477–505.CrossRefGoogle Scholar
Marcoux, Christopher. 2009. Institutional Flexibility in the Design of Multilateral Environmental Agreements. Conflict Management and Peace Science 26 (2):209–28.CrossRefGoogle Scholar
Martin, Lisa L. 1992. Interests, Power, and Multilateralism. International Organization 46 (4):765–92.CrossRefGoogle Scholar
McGinty, Matthew. 2007. International Environmental Agreements Among Asymmetric Nations. Oxford Economic Papers 59 (1):45–62.CrossRefGoogle Scholar
Michaelowa, Katharina, and Michaelowa, Axel. 2017. Transnational Climate Governance Initiatives: Designed for Effective Climate Change Mitigation? International Interactions 43 (1):129–55.CrossRefGoogle Scholar
Milgrom, Paul R., North, Douglass C., and Weingast, Barry R.. 1990. The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs. Economics and Politics 2 (1):1–23.CrossRefGoogle Scholar
Mitchell, Ronald B., and Keilbach, Patricia M.. 2001. Situation Structure and Institutional Design: Reciprocity, Coercion, and Exchange. International Organization 55 (4):891–917.CrossRefGoogle Scholar
Mookherjee, Dilip, and Png, Ivan P.L.. 1994. Marginal Deterrence in Enforcement of Law. Journal of Political Economy 102 (5):1039–66.CrossRefGoogle Scholar
Nordhaus, William. 2015. Climate Clubs: Overcoming Free-Riding in International Climate Policy. American Economic Review 105 (4):1339–70.CrossRefGoogle Scholar
Ostrom, Elinor. 1990. Governing the Commons: The Evolution of Institutions for Collective Action. Cambridge University Press.CrossRefGoogle Scholar
Pelc, Krzysztof J. 2009. Seeking Escape: The Use of Escape Clauses in International Trade Agreements. International Studies Quarterly 53 (2):349–68.CrossRefGoogle Scholar
Rosendorff, B. Peter. 2005. Stability and Rigidity: Politics and Design of the WTO's Dispute Settlement Procedure. American Political Science Review 99 (3):389–400.CrossRefGoogle Scholar
Rosendorff, B. Peter, and Milner, Helen V.. 2001. The Optimal Design of International Trade Institutions: Uncertainty and Escape. International Organization 55 (4):829–57.CrossRefGoogle Scholar
Slechten, Aurélie. 2020. Environmental Agreements Under Asymmetric Information. Journal of the Association of Environmental and Resource Economists 7 (3):455–81.CrossRefGoogle Scholar
Stern, Nicholas. 2007. The Economics of Climate Change: The Stern Review. Cambridge University Press.CrossRefGoogle ScholarPubMed
Sykes, Alan O. 1991. Protectionism As a “Safeguard”: A Positive Analysis of the GATT “Escape Clause” with Normative Speculations. University of Chicago Law Review 58 (1):255–305.CrossRefGoogle Scholar
Tavoni, Alessandro, Dannenberg, Astrid, Kallis, Giorgos, and Löschel, Andreas. 2011. Inequality, Communication, and the Avoidance of Disastrous Climate Change in a Public Goods Game. Proceedings of the National Academy of Sciences 108 (29):11825–29.CrossRefGoogle Scholar
Underdal, Arild. 1980. The Politics of International Fisheries Management: The Case of the Northeast Atlantic. Universitetsforlaget.Google Scholar
Von Stein, Jana. 2008. The International Law and Politics of Climate Change: Ratification of the United Nations Framework Convention and the Kyoto Protocol. Journal of Conflict Resolution 52 (2):243–68.CrossRefGoogle Scholar
McAllister and Schnakenberg supplementary material
McAllister and Schnakenberg supplementary material
PDF
232.3 KB