On the farsightedly and myopically stable international environmental agreements

Osmani, Dritan and Tol, Richard (2018) On the farsightedly and myopically stable international environmental agreements. Natural Resource Modelling, 31 (2). e12141 1-27. ISSN 0890-8575

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Abstract

We investigate the stability of International Environmental Agreements. The analysis of Chwe is extended by investigating the question how to find farsightedly stable coalitions. The myopic stability concept of d'Aspremont, Jacquemin, Gabszeweiz, and Weymark and the farsighted stability concept of Chwe are compared. Farsighted stability, direct and indirect domination are discussed. Considering of the direct domination, we check for the single-step stability by comparing the profits of every coalition member after one-step deviation has occurred, while considering the indirect domination (farsightedness) we check for the multistep stability by comparing the profits of every coalition member after a series of deviations have come to an end. On the contrary, myopic stability assumes that players look only one step ahead. The improvement of farsightedly and myopically stable coalitions to the environment quality and welfare are compared. Only the farsightedly stable coalition math formula improves the welfare and abatement by 20% and 79% in comparison to all three myopically stable coalitions together. Algorithms are developed, which can find all farsightedly stable coalitions structures.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
Depositing User: Richard Tol
Date Deposited: 22 Nov 2017 11:02
Last Modified: 03 Jul 2018 11:18
URI: http://sro.sussex.ac.uk/id/eprint/71462
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