2017 Volume 20 Pages 71-89
Theoretical analyses of self-enforcing international environmental agreements (IEAs) have adopted the assumption of identical countries. In this paper, we assume that each country is endowed with country-specific pollution abatement technology, and show that the asymmetry of abatement technology across countries plays an important role in IEA formation. Our welfare analysis presents that under an asymmetry of technology, larger size of IEA could result in a welfare loss. We also find that abatement technology transfer among countries could lead to a welfare loss by unstabilizing self-enforcing IEA.
