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Signaling in international environmental agreements: the case of early and delayed action

  • Michael JakobEmail author
  • Kai Lessmann
Original Paper

Abstract

This paper presents a stylized international environmental agreements game with two regions differing in their preference for environmental quality. If side payments are allowed, cooperation can increase the payoffs accruing to both regions. However, cooperation can be impeded by asymmetric information about the regions’ types and only become feasible once a region has credibly revealed its type. We show how in a two-stage game early (delayed) action can act as a credible signal to reveal private information on high (low) benefits. Yet, the cooperative solution with asymmetric information is Pareto-dominated by the outcome with perfect information.

Keywords

International environmental agreements Climate policy Asymmetric information Signaling game 

Notes

Acknowledgments

We thank Robert Marschinski, Christian Flachsland and two anonymous referees for helpful comments and suggestions.

Supplementary material

10784_2012_9170_MOESM1_ESM.doc (85 kb)
Supplementary material 1 (DOC 85 kb)

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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.Potsdam Institute for Climate Impact ResearchPotsdamGermany

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