Efficient Emissions Reduction

*Paul Schweinzer
Economics, University of York

Beatrice Roussillon
Economics, University of Manchester

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     Last modified: March 9, 2011
     Presentation date: 03/13/2011 10:15 AM in NH 1120, Session A
     (View Schedule)

Abstract
We propose a simple mechanism capable of achieving international agreement on the reduction of harmful emissions to their efficient level. It employs a contest creating incentives among participating nations to simultaneously exert efficient productive and efficient abatement efforts. Participation in the simplest, most stylised formulation 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. For a more realistic, gradual negotiation policy, participation enforcement through punishment clauses, exclusive trade agreements or environmental standards is discussed and shown to effectively discourage free-riding.