Groupe d’études et de recherche en analyse des décisions

G-2003-36

A Game-Theoretic Formulation of Joint Implementation of Environmental Projects

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The objective of this paper is to provide a game-theoretic interpretation of joint implementation in environmental projects. We consider a two-player game and solve it under three different modes of play. In the first case, the countries play a non cooperative game and optimize their welfare under an environmental constraint without having access to joint implementation. In the second case, we relax the last restriction allowing us thus to assess the merit of joint implementation by comparing the players' welfares achieved in the two cases. In the last scenario, the players jointly optimize their welfare under a collective environmental constraint. Comparing the last scenario's welfares to the previous one allows to assess the merit of cooperation.

, 24 pages