Abstract
This paper addresses the question of how uncertainty in costs and benefits affects the difficulty of reaching a voluntary agreement among sovereign states. A measure of “difficulty” is constructed related to side-payments necessary to make an agreement a Pareto-improving move. Using a simple model, it is shown that uncertainty actually makes agreement easier.
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JEL classifications: Q5, H4, D7, D8
An earlier version of this paper was presented at the Conference on Risk and Uncertainty in Environmental and Resource Economics, Wageningen, The Netherlands, June 2002.
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Kolstad, C.D. Piercing the Veil of Uncertainty in Transboundary Pollution Agreements. Environ Resource Econ 31, 21–34 (2005). https://doi.org/10.1007/s10640-004-6980-0
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DOI: https://doi.org/10.1007/s10640-004-6980-0