Social norms for the stability of international enviromental agreements

Abstract

<p style='text-indent:20px;'>This paper is devoted to study the stability of international environmental agreements (IEAs) in a pollution abatement context. Countries can decide to cooperate or to defect. Defector countries decide on their abatement levels by minimizing their own total cost whereas, signatory countries decide on their abatement levels by minimizing the aggregate of all cooperators.</p><p style='text-indent:20px;'>In the model, all countries have the same environmental damage instead, respect to the non-environmental cost, we assume that each signatory country has to punish a non-signatory for its behaviour, at some cost to itself (see [<xref ref-type="bibr" rid="b17">17</xref>]). We propose two different cases in which we have that punishment is directly proportional to the level of pollution (see [<xref ref-type="bibr" rid="b6">6</xref>] or not (see [<xref ref-type="bibr" rid="b5">5</xref>]). Punishments can be in the form of trade sanctions or import tariffs, as a measure to encourage cooperation.</p><p style='text-indent:20px;'>We model a differential game in order to determine both the optimal path of the abatement levels and stock pollutant as results of feedback Nash equilibria. Stability conditions, such as internal and external stability, are applied showing that different answers about the size of a stable IEA can be obtained.</p>