Competition for environmental aid and aid fungibility推荐.pdfVIP

Journal of Environmental Economics and Management 65 (2013) 1–11 Contents lists available at SciVerse ScienceDirect Journal of Environmental Economics and Management journal homepage: /locate/jeem Competition for environmental aid and aid fungibility Costas Hadjiyiannis a,n, Panos Hatzipanayotou b,c, Michael S. Michael a,c a Department of Economics, University of Cyprus, P.O. Box 20537, 1678 Nicosia, Cyprus b Athens University of Economics and Business, Greece c CESifo, Germany a r t i c l e i n f o a b s t r a c t Article history: Aid from environmentally conscious donors to developing recipients has long been Received 21 June 2011 thought of as a very promising way of preserving the global environment. However, aid Available online 24 April 2012 is fungible and recipients cannot commit to using it for the purpose it was intended. We Keywords: analyze competition for aid games with aid fungibility and cross-border pollution to Competition for aid gain insights on how to allocate environmental aid more efficiently. We set up a two Aid fungibility stage game of two recipients receiving aid from a donor interested in minimizing Environmental policies pollution. Recipients cannot commit on the use of aid but they can commit on the infrastructure necessary to use aid for pollution abatement. We find that the success