Business Intelligence

International Trade And The Feasibility Of Global Climate Change Agreements

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Executive Summary

Country incentives to participate in cooperative arrangements which either fully or partially internalize climate change externality from carbon emissions involve critical asymmetries. Small countries trade off own country costs of carbon mitigation actions against their own benefits from global improvement in climate which benefit all. Small countries thus have limited incentive to participate as their actions, while costly to them, have a significant impact on global temperature change which mainly benefits others. The authors discuss how the presence of international trade in goods affects the willingness of countries to join international negotiations on climate change.

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