Essays in international environmental economics

Chapter 1 is an international emissions agreement (IEA) between asymmetric countries. In order to achieve meaningful gains an IEA must be incentive compatible for a significant number of countries. It is shown that the gains to an IEA with full participation are potentially greater in the presence of asymmetry. The gains to an agreement with full participation are increasing in the variance of the benefit shares when abatement costs are symmetric. In general, the gains to an agreement are greater when the high benefit share countries are also high cost. The Nash and Stackelberg equilibria are derived for any arbitrary partition of countries into signatories and non-signatories to an agreement. An incentive compatibility constraint provides an upper bound on the required level of abatement under an agreement, as a function of any arbitrary coalition. Cost side asymmetries imply a role for pollution permit trading in implementing the efficient allocation of abatement. It is shown that a Pareto optimal IEA with full participation can be incentive compatible.; Chapter 2 is an evolutionary game trade model of goods that are environmentally differentiated. There is a single good that is differentiated as either of environmentally high or low quality. The short-run autarchy equilibria are Cournot-Nash, taking the proportion of high quality firms as given. The long-run evolutionary equilibrium is where the short-run Cournot-Nash equilibria are obtained and there is a zero-profit differential between high and low quality type firms. Under autarchy there is a unique stable mix of both types of firms in each country, given a parameter restriction. Under free trade the autarchy equilibria are unstable and at least one country is completely specialized. There is a unique evolutionary equilibrium, whose basin of attraction is the entire state space. Production of environmentally low quality type is assumed to entail a negative production externality. A country that produces the low quality good has an incentive to impose a “lack-of-pollution content” tariff on imports of the high quality good. This type of tariff can lead to rent-capture and pollution-shifting effects, benefiting domestic firms and the domestic environment, as well as creating tariff revenue. Furthermore, since firms are imperfectly competitive the increase in domestic price is less than the tariff, so the tariff revenue can be redistributed to make consumers better off.; Chapter 3 is a public goods experiment that tests provision when agents have asymmetric wealth and benefit shares of the public good. The interior Nash and Pareto levels are identical across treatments to compare provision levels. Pilot results show that when endowments are asymmetric and benefit shares are symmetric that provision closely approaches the Pareto optimal level, in stark contrast to previous experiments. Furthermore, in both treatments with asymmetric benefit shares provision levels conform to the Nash equilibrium prediction, contrary to the typical finding of over-contribution. These results may be due to subjects perception of fairness, but additional runs of the experiment are needed to validate these preliminary findings.