Abstract

The following dissertation consists of three essays that tackle topics in Environmental Economics. It focuses on the formation of International Environmental Agreements (IEAs) in three respective essays: (i) the first essay “IEAs - Contingency plans for all coalition sizes” uses the Stackelberg assumption to build a contingency plan for a remaining coalition when faced with a potential exit by one or more of its members. Homogeneous agents and quadratic benefit and environmental damage functional forms are used to compute contingency plans for all coalition sizes in order to immunise a coalition against single or multiple unilateral deviations, (ii) the second essay “IEAs - Contingency Plans under foresight” studies the series of strategies taken by a coalition of any size when members are foresighted, in that a member considers the possibility that once it acts, another member might react. It presents the strategies taken by different coalition sizes for subsequent unilateral deviations, and (iii) the third essay “IEAs - Choice of net emissions” adds abatement choice as a separate variable. Given that countries have two choice variables, the framework examines agreements on net emissions, in which countries commit to either emissions or abatement and choose the other variable independently in a subsequent stage of the game. Using numerical simulations, results suggest that cooperation on net emissions is possible even with a high degree of heterogeneity among two countries. Comparing results to the pure Nash non-cooperative benchmark case, cooperation on net emissions show that the model achieves lower aggregate net emissions and allow gains from cooperation to both countries.