Agreeing on efficient emissions reduction

Olivier Bos; Beatrice Roussillon; Paul Schweinzer

doi:10.1111/sjoe.12164

Agreeing on efficient emissions reduction

Olivier Bos, Beatrice Roussillon, Paul Schweinzer

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

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 language	English
Pages (from-to)	1-32
Number of pages	32
Journal	Scandinavian Journal of Economics
DOIs	https://doi.org/10.1111/sjoe.12164
Publication status	Published - 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.

Keywords

Climate policy
Contests
Agreements

Access to Document

10.1111/sjoe.12164

Agreeing on efficient emissions reduction
(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.
Submitted manuscript, 326 KB

Cite this

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