Stable International Environmental Agreements for Correlated Pollutants
Silva, Emilson C. D.
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We examine the stability of international environmental policy schemes when sovereign nations set policies to control both greenhouse gas emissions and traditional air pollutants. An international environmental policy scheme is defined to be stable if no country can obtain higher payoffs under other international environmental policy schemes. We show that when regional transnational air pollution damages are large relative to climate change damages, there are many efficient and stable international environmental policy schemes in which all nations belong to coalitions, the coalitions are completely interconnected and the income transfers promoted within all coalitions follow the Nash bargaining formula.