IF lecture 9 + 11

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is one challenge associated with enforcing economic sanctions in International Environmental Agreements?

They always increase the number of signatories.

They are easy to design and implement.

Credible threats are difficult to design. (correct)

They do not affect non-signatories.

Why are emissions considered hardly a credible threat in the context of International Environmental Agreements?

Countries benefit from self-damaging policies.

Emissions are always economically beneficial.

Countries are likely to adopt sustainable practices.

Countries are unlikely to sustain self-damaging policies. (correct)

What potential effect might carrying out sanctions have on the coalition of current signatories?

It may reduce the incentive to join the coalition. (correct)

It could increase non-signatory participation.

It would lead to more voluntary signatories.

It could eliminate the need for future sanctions.

What is one reason why the threat of economic sanctions is employed in International Environmental Agreements?

To punish non-signatories and increase signatories. Signup and view all the answers

How might credible threats impact the design of International Environmental Agreements?

They complicate the negotiation process. Signup and view all the answers

What is the first stage of the non-cooperative game theory in the context of International Environmental Agreements?

Coalition game Signup and view all the answers

How do countries approach the outcome of the emission game during the coalition game?

Backward induction Signup and view all the answers

What is the primary purpose of International Environmental Agreements (IEAs)?

To address the problem of climate change Signup and view all the answers

In the emission game, how do countries that sign the agreement behave?

Function as a single player Signup and view all the answers

What significant rule is determined during the coalition game?

Burden-sharing rule Signup and view all the answers

What is the first stage of the IEA framework according to non-cooperative game theory?

The coalition game where countries decide to sign Signup and view all the answers

What assumption is made regarding the decision-making process of countries in both stages?

All countries decide simultaneously Signup and view all the answers

Which of the following describes a challenge in the formation of IEAs?

The public good nature of a healthy environment Signup and view all the answers

What is the primary focus of the theoretical framework of International Environmental Agreements?

Coalition formation Signup and view all the answers

What common issue do binding agreements in IEAs help to overcome?

The free-riding problem among participants Signup and view all the answers

How do countries that sign an IEA behave during the emission game?

They collaborate as a single entity to determine emissions Signup and view all the answers

Which game theory concept is utilized to analyze countries' decisions regarding signing agreements?

Non-cooperative game theory Signup and view all the answers

What determines the resulting payoff for countries that sign the agreement in the emission game?

Burden-sharing rule Signup and view all the answers

According to Kolstad and Toman, what is the paradox concerning International Agreements?

They exist even though economic theory suggests they should not Signup and view all the answers

In the theoretical framework of IEAs, how is burden-sharing determined?

Through a predetermined rule agreed upon in coalitions Signup and view all the answers

What assumption is made about the countries' decisions in the stages of the IEA framework?

Countries decide simultaneously in both stages Signup and view all the answers

What condition must be satisfied for a coalition to be considered profitable?

Pi (S) ≥ Pi (∅) for each i ∈ S Signup and view all the answers

Under what circumstance is a coalition considered stable?

Pi (S extbackslash i) > Pi (S) for each i ∈ S Signup and view all the answers

Which type of game does the theory more closely resemble?

A chicken game Signup and view all the answers

What is a characteristic of a Pareto optimal coalition?

No other profitable coalition exists that makes all members better off Signup and view all the answers

What influences the size of the group of signatories in the game?

The strategic interaction between countries Signup and view all the answers

In the context of the coalition game, what indicates a profitable coalition?

Signatories have higher payoffs than defectors Signup and view all the answers

Which statement is true about a coalition that is both profitable and stable?

It must be Pareto optimal. Signup and view all the answers

What is a potential outcome of the two-stage game described?

A mixed group of signatories and defectors Signup and view all the answers

What is the main purpose of transfers in International Environmental Agreements?

To compensate countries that may lose from signing agreements Signup and view all the answers

Which of the following is NOT a method explored to enhance coalition size in environmental agreements?

Incentives for larger emissions Signup and view all the answers

What commitment is required from countries implementing transfer programs to non-signatories?

They must commit to cooperation Signup and view all the answers

What characterizes the equilibrium coalition in international environmental agreements?

It is generally formed by a low number of signatories Signup and view all the answers

Who conducted research showing the necessity of commitment for transfer programs in agreements?

Carraro and Siniscalco Signup and view all the answers

What is a potential drawback of countries agreeing to transfer programs?

It may cause dissatisfaction among signatory countries Signup and view all the answers

What is the primary challenge identified in extending the size of environmental coalitions?

The profitability dimension of negotiations Signup and view all the answers

Which of the following factors can potentially encourage countries to join an environmental agreement?

Financial transfers to offset losses Signup and view all the answers

What is a fundamental characteristic of International Environmental Agreements (IEAs)?

They are a public good. Signup and view all the answers

What problem do binding agreements in IEAs help to overcome?

The free-riding problem. Signup and view all the answers

According to Kolstad and Toman, what is the apparent contradiction regarding IEAs?

Economic theory suggests they should not exist, yet they do. Signup and view all the answers

What type of good is a healthy environment classified as in the context of IEAs?

Global public good. Signup and view all the answers

What is one of the main research questions regarding the design of IEAs?

How to best design an IEA? Signup and view all the answers

Which statement best reflects the role of participation in IEAs?

Participation is a necessary condition for the success of IEAs. Signup and view all the answers

What is a common misconception about IEAs as derived from the literature?

IEAs are always voluntary without any binding measures. Signup and view all the answers

Which factor is incorrectly assumed to determine the efficiency of IEAs?

The number of countries participating. Signup and view all the answers

Study Notes

Intergenerational Fairness Lecture Notes

International Environmental Agreements (IEAs) are seen as a way to address climate change.
A healthy environment is considered a global public good.
Participation in IEAs is a public good.
Binding agreements are used to overcome free-riding.
Research questions include how IEAs work, various agreement types, and optimal IEA design.
Kolstad and Toman (2005) described the "Paradox of International Agreements," noting that although IEAs are common, economic theory suggests they should not be effective as observed.

Theoretical Framework

The standard tool for analyzing IEAs is non-cooperative game theory of coalition formation.
This involves two stages:
- The coalition game where countries decide whether or not to join the agreement, defining a burden-sharing rule.
- The emission game where participating countries act as a single player and share the outcome according to their burden-sharing rule.
All countries simultaneously make decisions in both stages.

Theoretical Framework: Emission Game

During the coalition game, countries forecast the play and outcome of the emission game.
Countries use backward induction to determine the best strategy for the emission game in each coalition scenario.
Exact payoff structures for coalition and non-coalition members are not required.
The key assumption is that each country's payoff grows with the coalition's size (number of participants).

Theoretical Framework: Coalition Game (1)

All countries are identical and can only sign one agreement; proposing a different agreement after joining is forbidden.
Countries not in a coalition act as singletons.
When a country leaves a coalition (S), other members are assumed to remain within the coalition.

Theoretical Framework: Coalition Game (2)

A coalition (S) is considered profitable if each country within it gains by joining (versus no coalition).
A coalition is stable if no member gains by leaving, and no outside member benefits by joining.
A profitable and stable coalition is also Pareto-optimal; no other profitable and stable coalition exists that improves everyone's situation.

Partial Cooperation

The IEA scenario isn't a prisoner's dilemma but more like a "chicken game."
The equilibrium involves a profitable and stable, but partial, coalition.
Two groups of countries exist at equilibrium: signatories and defectors.
The size of the signatory group depends on strategic interactions (reaction functions).

Small Coalitions: Other Policies?

The equilibrium coalition is typically composed of a small number of signatories.
Research explores ways to expand coalition size beyond emission controls.
Policy areas include transfers, issue linkages, and/or threats.

IEAs with Transfers

Transfers are often proposed to compensate countries that lose from signing an agreement.
Transfers can expand initially stable but small coalitions.
Implementing transfer programs necessitates cooperation from all countries involved, as seen in previous studies.

IEAs with Issue Linkages

Linking environmental negotiations to other economic issues (e.g., trade, technology) is beneficial.
This can reduce limitations from asymmetries and increase stable coalition size by strategically using linked benefits.

IEAs with Threats

Using economic sanctions (e.g., trade) to punish non-signatories can raise the number of participants.
Credibly designed threats are difficult to establish, as emissions are usually not a sufficient threat.
Imposing sanctions to draw in more members may reduce the commitment from already participating countries instead.
Lastly, the lecturer expresses gratitude to the audience.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz explores the concept of Intergenerational Fairness in the context of International Environmental Agreements (IEAs). It covers how these agreements function, the challenges of free-riding, and the theoretical frameworks used to analyze coalition formation. Test your understanding of the dynamics of global public goods and optimal designs for environmental agreements.