L’Atelier CIREQ-CIRANO d’économie de l’environnement et des ressources naturelles est organisé en collaboration avec le CIRANO. Il est conjoint avec les départements d’économique des universités de Montréal, du Québec à Montréal, McGill et HEC Montréal.
Cet événement s’adresse aux chercheurs et étudiants de doctorat qui s’intéressent à l’économie des ressources naturelles et de l’environnement.
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Eric Bahel (Virginia Tech)
Anonymous and Strategy-Proof Voting under Subjective Expected Utility Preferences
We study three axioms in the model of constrained social choice under
uncertainty where (i) agents have subjective expected utility preferences over acts and (ii) different states of nature have (possibly) different sets of available outcomes. Anonymity says that agents’ names or labels should never play a role in the mechanism used to select the social act. Strategy-proofness requires that reporting one’s true preferences be a (weakly) dominant strategy for each agent in the associated direct revelation game. Range unanimity essentially says that a feasible act must be selected by society whenever it is reported as every voter’s favorite act within the range of the mechanism. We first show that every social choice function satisfying these three axioms can be factored as a product of voting rules that are either constant or binary (always yielding one of two pre-specified outcomes in each state). We describe four basic types of binary factors: three of these types are novel to this literature and exploit the voters’ subjective beliefs. Our characterization result then states that a social choice function is anonymous, strategy-proof and range-unanimous if and only if every binary factor (in its canonical factorization) is of one of these four basic types.
Dana Ghandour (Concordia University)
Environmental Cooperation and Trade – The Impact of Heterogeneity in Environmental Damages: An Endogenous Solution
This paper utilizes a three-country static model of environmental cooperation with trade to analyze the stability of partial and global International Environmental Agreements (IEAs) among environmentally heterogeneous countries. Strong incentives to free ride and challenges in
enforcing international environmental agreements make international cooperation a difficult task. In the context of international trade, governments face a tradeoff between enforcing higher taxes to cooperatively reduce emissions and paying higher tariffs on exports when acting noncooperatively. Diamantoudi et al. (2018a) demonstrated that stable coalitions among homogeneous countries are larger and provide significant welfare gains compared to the basic model without trade.
The paper’s objectives, therefore, are: (i) To determine whether environmental cooperation among heterogeneous countries provides environmental gains, overall welfare gains, or both, (ii) To identify which cooperative scenarios will emerge in a stable environmental coalition to exploit these gains, and (iii) To capture the effect of heterogeneity in environmental damages on the stability of these environmental coalitions. Cooperation entails that countries belonging to the same coalition choose the same emissions tax rate and common import tariffs. In the proposed model, each country has a single firm producing an emission-intensive
homogeneous good, which results in an equal number of transboundary emissions such as carbon dioxide. The game is a three-stage static coalition formation game solved by backward induction. In stage one, each country chooses its coalition membership. A coalition is deemed stable if no firm has an incentive to either enter or exit the coalition (D’Aspremont et al., 1983). In stage two, each country determines the optimal emissions tax and import tariff rates that maximize the coalition’s welfare. In stage three, each firm chooses non-cooperatively its profit-maximizing production level. Firms compete à la Cournot in a segmented market with positive endogenous import tariffs rather than in a free trade setting.
The main findings demonstrate that the grand coalition is stable at varying levels of environmental damage heterogeneity. When market sizes are sufficiently small, the grand coalition leads to both environmental and overall welfare gains. However, as market sizes grow sufficiently larger, the
grand coalition only yields overall welfare gains.
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