Title

International Environmental Agreements with reference points

Document Type

Journal article

Source Publication

Journal of Behavioral and Experimental Economics

Publication Date

12-2015

Volume

59

First Page

68

Last Page

73

Publisher

Elsevier BV

Keywords

International Environmental Agreements, Reference points

Abstract

Whether or not the current climate talks achieve a meaningful treaty, the current negotiation forms important reference points for future negotiations. In this paper, we introduce reference points to a canonical model of International Environmental Agreements (IEAs). Countries have reference points on IEA membership. An IEA member that abates is aggrieved if there is a material loss relative to the case with the referenced membership. We find that reference points weakly reduce the abatement level for an IEA with given membership, while interestingly, reference points weakly increase the equilibrium membership and thus the equilibrium abatement level of the IEA. These results imply that effective management of reference points could be conducive to the resolution of the climate problem.

DOI

10.1016/j.socec.2015.10.004

Print ISSN

22148043

E-ISSN

22148051

Publisher Statement

Copyright © 2015 Elsevier Inc. All rights reserved.

Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Hong, F. (2015). International Environmental Agreements with reference points. Journal of Behavioral and Experimental Economics, 59, 68-73. doi: 10.1016/j.socec.2015.10.004