Policy Research Domains (Adjacent Basic Research Areas) A. Institutions Related to Financial and Labor Markets, and New Corporate Law and Governance

The Design of an International Institution to Prevent Global Warming

Project Leader/Sub-Leader


FURUSAWA Taiji Faculty Fellow



2008 - 2010

It has proven difficult to take effective and concerted international action against global warming because of different interpretations of the mechanisms of global warming and because countermeasures require current generations to "sacrifice" themselves for future generations. Under these conditions, it is not enough for the international cooperative framework to include retaliatory and punitive provisions. Rather, it becomes necessary to maintain an incentive for cooperation by making a moral appeal. Hudec (1990) states that compliance with GATT laws is based on the two factors of "moral and political response to international obligations" and the "threat of retaliatory measures." The purpose of this project is to theoretically explore cooperation promoting systems that are based on the soft and hard imperatives of moral action and retaliation.

As has been pointed out with respect to the Kyoto Protocol, building a mechanism to tackle global warming involves a free-rider problem. Issues related to participation in cooperative initiatives as examined by Maruta and Okada (2005) and Furusawa and Konishi (2008) will be taken into account in developing our model. Environmental policies (such as a carbon tax) and trade policies (such as import tariff) must be simultaneously considered in designing international systems to prevent global warming. A crucial issue in policy choice involves the question of whether optimal contracts will bind both environmental and trade policies or either of the two. The project will also consider these choices in light of Horn, Maggi and Staiger (2006).

April 25, 2008 - September 30, 2010

Major Research Results


RIETI Discussion Papers