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research article

The Impact of Surplus Sharing on the Stability of International Climate Agreements

Weikard, Hans-Peter
•
Altamirano Cabrera, Juan Carlos  
•
Finus, Michael
2006
Oxford Economic Papers

This paper analyses stability of coalitions for greenhouse gas abatement under different sharing rules applied to the gains from cooperation. We use a 12-region model to examine internal and external stability of coalitions. We determine and compare stable coalitions under different surplus sharing rules; for example, grandfathering (sharing proportional to current emissions) and a number of equitable rules, i.e. sharing according to historical responsibilities for past emissions. Due to strong free-rider incentives we find only small stable coalitions for all sharing rules examined. We observe that stable coalitions consist of regions with low marginal abatement costs that are attractive partners in any coalition and regions receiving the highest shares of the surplus from cooperation under a particular sharing rule. We find that equitable rules may not be conducive to success: in fact, a grandfathering scheme leads to the most successful coalition in terms of global abatement and global welfare.

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Type
research article
DOI
10.1093/oep/gpi047
Author(s)
Weikard, Hans-Peter
Altamirano Cabrera, Juan Carlos  
Finus, Michael
Date Issued

2006

Published in
Oxford Economic Papers
Volume

58

Start page

209

End page

232

Subjects

international environmental agreements

•

permit trading

•

surplus sharing

URL

URL

http://oep.oxfordjournals.org/content/vol58/issue2/index.dtl
Editorial or Peer reviewed

REVIEWED

Written at

OTHER

EPFL units
LEURE  
Available on Infoscience
February 8, 2008
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/17581
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