Does a Clean Development Mechanism Facilitate International Environmental Agreements?

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Abstract

When politicians negotiate in international climate conventions they may suffer from incomplete information for each other’s preferences for reaching an agreement. As is known, this may cause failure to reach an efficient cooperative agreement. We study the role of cross border abatement provisions in the likelihood of such failure. For instance, the clean development mechanism was introduced in the context of the Kyoto Protocol to allow countries to make efficiency-enhancing use of cross-country low-cost mitigation opportunities. We use a simple bargaining framework to uncover why this mechanism may reduce the likelihood of reaching an efficient cooperative climate agreement.

Keywords

Clean development mechanism International climate agreements Bargaining Incomplete information 

JEL Classification

Q54 Q58 F53 H41 

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Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  1. 1.Max Planck Institute for Tax Law and Public FinanceMunichGermany
  2. 2.Faculty of Business and EconomicsTU DresdenDresdenGermany

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