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Participation and duration of environmental agreements

Author(s): Battaglini, Marco; Harstad, B

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Abstract: © 2016 by The University of Chicago. All rights reserved. We analyze participation in international environmental agreements in a dynamic game in which countries pollute and invest in green technologies. If complete contracts are feasible, participants eliminate the holdup problem associated with their investments; however, most countries prefer to free ride rather than participate. If investments are non contractible, countries face a hold up problem every time they negotiate; but the free-rider problem can be mitigated and significant participation is feasible. Participation becomes attractive because only large coalitions commit to long-term agreements that circumvent the holdup problem. Under well-specified conditions even the first-best outcome is possible when the contract is incomplete.
Publication Date: Feb-2016
Citation: Battaglini, M, Harstad, B. (2016). Participation and duration of environmental agreements. Journal of Political Economy, 124 (1), 160 - 204. doi:10.1086/684478
DOI: doi:10.1086/684478
ISSN: 0022-3808
EISSN: 1537-534X
Pages: 160 - 204
Type of Material: Journal Article
Journal/Proceeding Title: Journal of Political Economy
Version: Final published version. Article is made available in OAR by the publisher's permission or policy.

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