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Game Practice and the Environment

Edited by Carlo Carraro and Vito Fragnelli

This book summarises the latest achievements of researchers involved in the application of game theory to the analysis of environmental matters. It provides an overview of different methods and applications, and gives the reader new insights on the solutions to complex environmental problems. The authors investigate various game theoretic approaches, including cooperative and non-cooperative game theory, and analyse both dynamic and static games. They illustrate the application of these approaches to global and local environmental problems, and present novel but effective tools to support environmental policy making. In particular, they focus on three important issues; climate negotiations and policy, the sharing of environmental costs, and environmental management and pollution control.
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Chapter 1: Stable International Agreements on Transfrontier Pollution with Ratification Constraints

Sergio Currarini and Henry Tulkens


1. Stable international agreements on transfrontier pollution with ratification constraints1 Sergio Currarini2 and Henry Tulkens3 1. INTRODUCTION International agreements on environmental standards usually require the approval of domestic political institutions. Once an agreement is found at the international level, its prescriptions must be translated into domestic laws through a ratification process. The fact that negotiating countries are in all respects sovereign and independent decision makers, makes ratification a substantial element (possibly a constraint) in the decisional process. The difficulty of attaining the full commitment of many countries in actual cooperation problems (as, for instance, at the Rio and Kyoto Conferences on Climate Change) may be partially explained as the effect of such domestic political constraints on the decisions of countries’ political leaders. The stability of an international agreement has been identified in the literature with the properties of various equilibrium concepts in gametheoretic models of cooperation. Part of this literature has looked at the possibility of ‘full’ cooperation, that is, cooperation among all involved countries. Some of these works have studied the core of cooperative games representing the decisional process at the international level (see Chander and Tulkens, 1992, 1995 and 1997; Maler 1989; and Kaitala et al., 1995). Core agreements are ‘stable’ solutions to the negotiation problem in that no coalition of countries is able to induce a preferred outcome by its own means. Other contributions have studied the possibility of the formation of smaller coalitions: see, for example, Carraro and Siniscalco (1993)...

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