How does the design of international environmental agreements affect investment in environmentally friendly technologies ?
) (PSE – Paris-Jourdan Sciences Economiques – CNRS : UMR8545 – Ecole des Hautes Etudes en Sciences Sociales (EHESS) – Ecole Nationale des Ponts et Chaussées – Ecole Normale Supérieure de Paris – ENS Paris, CES – Centre d’économie de la Sorbonne – CNRS : UMR8174 – Université Panthéon-Sorbonne – Paris I) Abstract This paper studies the link between the design of international environmental agreements and the incentives for the private sector to invest in cleaner technologies. More specifically, it compares the performance, in the Paretoo sense, of two types of agreement : an agreement on a uniform standard with transfers and an agreement on differentiated standards without transfers. To achieve this goal, we use a multi-stage game where the private sector anticipates its irreversible investment given the expected level of abatement standards, resulting from future bilateral negotiations. Our findings indicate that whenever countries are able to partially commit, the agreement on a unifor
