1. Introduction
The lack of supranational authority implies that international policy measures
must rely solely on voluntarily contributions. Barrett (1990 and 1994) seriously
questions the effectiveness of international environmental agreements, as ex-
emplified by the troublesome process of regime building for the climate change
issue. The reason is that the creation of the right set of incentives for voluntary
reductions of emissions in excess of purely non-coordinated reduction levels is
not easy. Therefore, a very concerned country might initiate unilateral actions if
such actions act as ‘setting a good example’. Unilateral actions appear in many
areas of the international society such as unilateral reductions in armaments,
unilateral aid to developing countries, unilateral reductions in trade sanctions or
increases of trade concessions, and in the field of transboundary pollution prob-
lems, unilateral cut backs in emissions. Unilateral actions to alleviate IEP have
been analysed in e.g. Hoel (1991) and Barrett (1990). A rather pessimistic result
emerges in both and can be summarized by saying that leadership of this kind is
seldom rewarded.
The main purpose of this paper is to re-examine the prospect of unilateral ac-
tions providing a non-cooperative alternative to the cooperative actions of mul-
tinational negotiations. Although it cannot be expected that such actions will, at
any point, bring about a fully cooperative solution, they nevertheless might
make a difference in overcoming the first, and potentially most troublesome
phase, in the process of building up an effective reduction regime when incen-
tives do not support cooperation.
In the model of Hoel (1991), two countries play a non co-operative game each
maximizing the net-benefit from reducing environmentally harmful emissions.
One country, however, also cares about the emission reductions in the other
country. This is modelled by introducing a function containing non-economic
variables. Such unilateral actions might be justified as being a contribution in
the right direction, and also, by setting a good example of this type, one might
affect the behaviour of other countries, and/or improve the chances of reaching