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The Importance of Pre-commitment in International Environmental Agreements

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  • MacDonald, Ian

Abstract

In the face of transboundary pollution externalities, cooperation in regulatory efforts between countries is required to move the economy towards the efficient outcome. Existing research in this field concludes that such cooperation is unlikely to occur because of the free-rider problem. This paper introduces the institution of international treaties and shows that a cooperative outcome supported by a treaty is sustainable. One effective treaty structure requires countries to reduce their pollution levels by a common percentage from the non-cooperative benchmark level, but only if all countries sign it. Under such a treaty arrangement, welfare improvements are generally significant.

Suggested Citation

  • MacDonald, Ian, 2001. "The Importance of Pre-commitment in International Environmental Agreements," 2001 Conference (45th), January 23-25, 2001, Adelaide, Australia 125752, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare01:125752
    DOI: 10.22004/ag.econ.125752
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    References listed on IDEAS

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    1. Todd Sandler & Keith Sargent, 1995. "Management of Transnational Commons: Coordination, Publicness, and Treaty Formation," Land Economics, University of Wisconsin Press, vol. 71(2), pages 145-162.
    2. Parkash Chander & Henry Tulkens, 2006. "Theoretical Foundations of Negotiations and Cost Sharing in Transfrontier Pollution Problems," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 123-134, Springer.
    3. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, December.
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