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Agreeing on efficient emissions reduction

Author

Listed:
  • Olivier Bos

    (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas)

  • Beatrice Roussillon

    (UGA UFR FEG - Université Grenoble Alpes - Faculté d'Économie de Grenoble - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019])

  • Paul Schweinzer

    (Alpen-Adria-Universität Klagenfurt [Klagenfurt, Austria])

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.

Suggested Citation

  • Olivier Bos & Beatrice Roussillon & Paul Schweinzer, 2016. "Agreeing on efficient emissions reduction," Post-Print hal-01484843, HAL.
    • Handle: RePEc:hal:journl:hal-01484843
    DOI: 10.1111/sjoe.12164
    Note: View the original document on HAL open archive server: https://hal.science/hal-01484843v1
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    Cited by:

    1. Bård Harstad, 2016. "The Dynamics of Climate Agreements," Journal of the European Economic Association, European Economic Association, vol. 14(3), pages 719-752.
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    3. Heidelmeier, Lisa & Sahm, Marco, 2023. "A Vertically Differentiated Duopoly Model with Environmental Awards," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277635, Verein für Socialpolitik / German Economic Association.
    4. Llerena, D. & Roussillon, B. & Teyssier, S. & Buckley, P. & Delinchant, B. & Ferrari, J. & Laranjeira, T. & Wurtz, F., 2021. "Demand response in the workplace: A field experiment," Working Papers 2021-01, Grenoble Applied Economics Laboratory (GAEL).

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    More about this item

    Keywords

    climate policy; agreement; contest; global change; competitive examination; competitiveness; politique de l'environnement; changement climatique; concours; émission de carbone; compétitivité; accord international sur le climat; productivité;
    All these keywords.

    JEL classification:

    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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