Transfers to sustain core-theoretic cooperation in international stock pollutant control

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Abstract
International environmental agreements aiming at correcting negative externalities generated by transboundary pollution are difficult to achieve for many reasons. Important obstacles arise from asymmetry in costs and benefits, and instability may occur due to the fact that coalitions of countries may attempt to do better for themselves outside of any proposed agreement. In a static context, it has already been shown that it is possible to achieve stability in the sense of the core of a cooperative game, by means of appropriately defined transfers between the countries involved. However, the transboundary pollution problems that are most important are caused by accumulated pollutants so that a dynamic analysis is required. This paper provides a transfer scheme that yields a core property in a dynamic context. The possibility of computing such transfers numerically is discussed.

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