Unilateral Actions the Case of International Environmental Problems

10. Appendixes

Appendix 1

NBi =Bi(qi,qj)-C(qi), i=1,2.

B_i^'(q) > 0 and B_i^''(q) < 0 while C_i^'(q_i) > 0 and C_i^''(q_i) > 0 .

Comparative static. Suppose that a is some parameter that shifts the net benefit
function of country 1. The Nash equilibrium is described by the conditions:

^dNB1( q 1⁽ a )^, q 2( a )^, a ) = 0

^dq ι

^dNB 2( qι( a )^, q 2( a )) = 0

^dq 2

Differentiating these equations with respect to a gives us the system

Applying Cramer’s rule, we have

∂²NB₁ ∂²NB₁

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