International Environmental Agreements with mixed strategies and investment

Fuhai HONG, Larry KARP

Research output: Journal PublicationsJournal Article (refereed)

17 Citations (Scopus)

Abstract

We modify a canonical participation game used to study International Environmental Agreements (IEA), considering both mixed and pure strategies at the participation stage, and including a prior cost-reducing investment stage. The use of mixed strategies at the participation stage reverses a familiar result and also reverses the policy implication of that result: with mixed strategies, equilibrium participation and welfare are higher in equilibria that involve higher investment.
Original languageEnglish
Pages (from-to)685-697
Number of pages13
JournalJournal of Public Economics
Volume96
Issue number9-10
DOIs
Publication statusPublished - 1 Oct 2012
Externally publishedYes

Keywords

  • Climate agreement Participation game
  • International Environmental Agreement
  • Investment
  • Mixed strategy

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