International Environmental Agreements with mixed strategies and investment

Authors

Fuhai HONG, Nanyang Technological University
Larry KARP, University of California, Berkeley; Ragnar Frisch Center for Economic Research

Document Type

Journal article

Source Publication

Journal of Public Economics

Publication Date

10-2012

Volume

96

Issue

9-10

First Page

685

Last Page

697

Publisher

Elsevier BV

Keywords

International Environmental Agreement, Climate agreement Participation game, Investment, Mixed strategy

Abstract

We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and also reverses the policy implication of that result: with mixed strategies, equilibrium participation and welfare are higher in equilibria that involve higher investment.

DOI

10.1016/j.jpubeco.2012.05.003

Print ISSN

00472727

Publisher Statement

Copyright © 2012 Elsevier B.V. All rights reserved.

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

Full-text Version

Publisher’s Version

Language

English

Recommended Citation

Hong, F., & Karp, L. (2014). International Environmental Agreements with mixed strategies and investment. Journal of Public Economics, 96(9-10), 685-697. doi: 10.1016/j.jpubeco.2012.05.003