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Séminaire du CIRED

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Olivier Bos (U P2) and Béatrice Roussillon (U Grenoble-Alpes) and Paul Schweinzer (U of Klagenfurt), "Agreeing on efficient emissions reduction"

We propose a simple contest-based mechanism providing incentives to reduce harmful emissions to their efficient level without infracting upon productive efficiency. Participation in the most stylised form of the scheme is voluntary and individually rational ; all rules are mutually agreeable and are unanimously adopted if proposed. The scheme balances its budget and requires no principal. In a perhaps more realistic stochastic output version which could potentially inform policy decisions, we show that the transfers required by the efficient mechanism create a mutual insurance motive which may serve as effective rationale for the (gradual) formation of International Environmental Agreements.