Agreeing on efficient emissions reduction

Olivier Bos, Beatrice Roussillon, Paul Schweinzer

Research output: Contribution to journalArticlepeer-review


We propose a simple mechanism providing incentives to reduce harmful emissions to their efficient level without infracting upon productive efficiency. The mechanism employs a contest creating incentives among participating nations to simultaneously exert efficient productive and efficient abatement efforts. Participation in the most stylised form of the scheme is voluntary and individually rational; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive which may serve as effective rationale for the (gradual) formation of International Environmental Agreements.
Original languageEnglish
Pages (from-to)1-32
Number of pages32
JournalScandinavian Journal of Economics
Publication statusPublished - 5 May 2016

Bibliographical note

(c) The editors of The Scandinavian Journal of Economics 2015. This is an author produced version of a paper accepted for publication in Scandinavian Journal of Economics. Uploaded in accordance with the publisher's self-archiving policy.


  • Climate policy
  • Contests
  • Agreements

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