Research Seminar Environmental & Development Economics"Strategic delegation and centralized climate policy“Wolfgang Habla (ZEW)

30. Januar 2019

The Research Seminar Environmental & Development Economics welcomes Wolfgang Habla (ZEW), who will present his work on

"Strategic delegation and centralized climate policy”.

Place: Zentralbibliothek Recht, Rothenbaumchaussee 33 (Google Maps), Room Ro 33 BG 3/4
Hour: 12:15-13:45
We are looking forward to seeing you there!

Abstract
We analyse a typical principal-agent relationship in the context of international environmental agreements. First, the principals delegate the authority to negotiate an agreement to an agent each, who acts on their behalf. Second, the appointed agents bargain over the total level of emissions and the allocation of permits. In the last stage, emission permits are traded. Solving by backwards induction and using the Nash-Bargaining Solution, we find that despite the strategic considerations in the choice of the delegates, global emissions are lower under cooperation in comparison to non-cooperative policies. Furthermore, for cooperation to be mutually beneficial for both principals, their countries need to be sufficiently symmetric.