International Environmental Permit Trade and Debt: the Consequences of Country Sovereignty and Cross-Default Policies
Journal
Review of International Economics
Type
journal article
Date Issued
1995-02-01
Author(s)
Mohr, Ernst
Abstract
We investigate the joint occurrence of international intertemporal trade and international environmental-permit trade, both of which are subject to country sovereignty. Assuming that side payments cannot be made to keep a debtor country from terminating international environmental cooperation, we analyze the impact of these two trade opportunities on a debtor country's incentive to continue environmental cooperation. We also show how, by way of a suitable strategic linkage between debt and permit trade, the public good of ensuring continued environmental cooperation can be provided by the supply side of private international loans.