Stability of climate coalitions in a cartel formation game

M. Finus, E.C. van Ierland, R.B. Dellink

Research output: Contribution to journalArticleAcademicpeer-review

55 Citations (Scopus)

Abstract

This paper analyses the formation and stability of coalitions to form international environmental agreements. We present and apply the Stability of coalitions model to assess the internal and external stability of all possible coalition structures in a cartel formation game; first under the assumption that no transfers take place and second for a transfer scheme. One important novelty of this paper is the analysis of the incentive structure of twelve regions for all possible combinations of (cartel) coalitions in an empirical setting with asymmetric regions. We show that stable coalitions can emerge only if benefits from global abatement are sufficiently high or if an appropriate transfer scheme is introduced.
Original languageEnglish
Pages (from-to)271-291
JournalEconomics of Governance
Volume7
Issue number3
DOIs
Publication statusPublished - 2006

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