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but also private benefits that only abating countries receive through the improvement of their local environments (ancillary benefits). This study presents an IEA model with ancillary benefits with the linear and quadratic emission abatement cost functions of each country and investigates the effect of ancillary benefits on the condition for full participation in IEA. Our main results show that full-participation IEA is sustained as WRP equilibrium even though ancillary benefits are taken into consideration.
Additionally, the introduction of ancillary benefits is shown to decrease the number of punishing countries with linear costs, while this number remains unchanged with convex costs.
Chapter 5 analyzes the feasibility of regional agreements. This chapter provides a new framework for regional types of IEAs, which include punishment exceptions for accidental deviation. We consider that deviation from an agreement can occur accidentally because of phenomena such as natural disasters, even if the agreement is sustained as a WRP equilibrium. We present a new strategy, called Regional Cooperative, which integrates accidental deviations into an IEA. Our model reveals that punishing countries tend to revoke the punishment of deviators and return to cooperation if an accidental deviator increases its abatement volume; that is, the abatement efforts of the accidental deviator can lead to renegotiation. The Regional Cooperative strategy motivates the accidental deviator to try to engage in abatement and the punishing countries to restart cooperation by renegotiation. We conclude that social welfare loss by punishment is prevented through renegotiation in cases of accidental deviation.
Our results in this doctoral thesis denote the feasibility of global and regional IEAs and the effectiveness of credible punishment to sustain countries’ cooperation for
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emission abatements, considering several cases. Thoroughly, we adopt the repeated game considering the multilateral period of games and possibility of deviation from the agreement. We consider a repeated game tends to reflect on the real world because, in general, an agreement is implemented for a long-term period and needs to address the issue of deviations. The results obtained by each chapter present significant and indispensable policy implications for implementing the IEA with long-term vision and punishment scheme for deviation.
After the expiration of the first commitment period of the Kyoto Protocol in 2012, the Paris Agreement took effect in 2015, aiming for full participation by all countries.
That is, those countries not required to engage in emission abatement under the Kyoto Protocol must participate under the Paris Agreement and reduce their emission. In the future, therefore, we should consider the assistance from developed countries to developed countries such as monetary transfer and technical transfer. That is, we should consider new methods to sustain countries’ cooperation, using these assistances as alternative ways of punishment.
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