GEOLOGY 002 Lecture Notes - Lecture 18: Marginal Utility, Qix, Marginal Cost
Document Summary
Collective well-being increased if all countries cooperate in managing shared environmental resources. Every country will earn higher returns by free riding on virtuous behavior of remaining cooperators. Countries have incentives to develop institutions which can punish free riding. Ieas must be self-enforcing: no country forced to sign iea, signatories can always withdraw from agreement. Must make it attractive to sign, and carry out terms. Game theory is used to explore the properties of self-encoring ieas. High degree of cooperation only achieved when difference between global net benefits under noncooperative and full cooperative outcomes is small: second model. Maximum number of countries that can sustain the full cooperative outcome is only large when the difference between global net benefits under the noncooperative and full cooperative outcomes is small. Linear marginal abatement benefits and costs: i = identical countries: each emits a pollutant that damages a shared environmental resource, depend on current total abatement [bi(q)]
