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Roles of Flexible Mechanisms in International Environmental Agreements

Author

Listed:
  • Jeongmeen Suh

    (Soongsil University)

  • Myeonghwan Cho

    (University of Seoul)

Abstract

This paper focuses on the roles of flexible mechanisms in international environmental agreements (IEAs) and investigates the possibility of IEAs to achieve globally optimal transboundary pollution reduction. We first demonstrate that emission trading does not ensure the globally optimal outcome. Then, by introducing the investing schemes (Joint Implementation and Clean Development Mechanism) together with Emissions Trading, we also show that the global optimum can be achieved under a properly designed cost-sharing rule. Moreover, there exists an initial permit allocation with which every country can be better off through the flexible mechanisms. This finding implies that the countries can reach an agreement that can help achieve the globally optimal outcome.

Suggested Citation

  • Jeongmeen Suh & Myeonghwan Cho, 2017. "Roles of Flexible Mechanisms in International Environmental Agreements," Korean Economic Review, Korean Economic Association, vol. 33, pages 239-265.
    • Handle: RePEc:kea:keappr:ker-20171231-33-2-02
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    International Environmental Agreement; Flexible Mechanism; Emissions Trading System; Joint Implementation; Kyoto Protocol;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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