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Agreeing on efficient emissions reduction

By Olivier Bos, Beatrice Roussillon and Paul Schweinzer

Abstract

We propose a simple contest-based mechanism providing incentives to reduce harmful emissions to their efficient level without infringing upon productive efficiency. Participation in the most stylized form of the scheme is voluntary and individually rational; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version, which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive that can serve as an effective rationale for the (gradual) formation of international environmental agreements

Topics: agreement, climate policy, contest, global change, competitive examination, competitiveness, politique de l'environnement, changement climatique, concours, émission de carbone, compétitivité, accord international sur le climat, productivité, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, [SDE.ES]Environmental Sciences/Environmental and Society, [SDE.MCG]Environmental Sciences/Global Changes
Publisher: 'Wiley'
Year: 2016
DOI identifier: 10.1111/sjoe.12164
OAI identifier: oai:HAL:hal-01484843v1
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