AbstractEnvironmental Matching Agreements • June 1st, 2010
We consider matching schemes as a model for transboundary environmental agreements, and investigate their effectiveness. In the first stage, after the rule of matching scheme is announced, each country determines its matching rate. In the second stage, it determines un- conditional flat abatement taking the value of the matching rate as given. These decisions are made noncooperatively. Each country is imposed an additional abatement that depends on its matching rate and the other countries’ flat abatements. The analysis of a matching game with asymmetric countries as players suggests the existence of a subgame perfect equilibrium leading to an efficient outcome, and thus shows that matching agreements are effective.
