Signalling in International Environmental Agreements: Using Pre-Agreement Emission Level as a Signalling Device

This paper addresses the question about strategic incentives in international environmental agreements and tries to give a positive description of how the design of the agreement influences the strategic behaviour of potential participants before they enter the treaty. A common feature of the design of agreements is that the reduction obligations (RO) are made contingent on a pre-agreement or baseline emission. As it is assumed that countries posses better information about their reduction costs than does the international body in charge of deciding the RO, countries might have incentivesto signal higher costs by increasing their baseline emission, and thereby reducing the costs of entering the agreement...