International environmental agreements with ancillary benefits: Repeated games analysis

- Climate change mitigation generates social primary and private ancillary benefits.
- We examine the international environmental agreement (IEA) with ancillary benefits.
- Ancillary benefits function as a complementary device of punishment scheme for IEA.
- We find that full participation is achievable even though ancillary benefits exist.

Both ancillary and primary benefits, generated by climate change mitigation, are indispensable key factors to implement the full participation in international environmental agreement (IEA). This paper presents a new IEA model with ancillary benefits, using a repeated game with the linear and quadratic emission abatement cost functions of each country. This study also investigates the effect of ancillary benefits on the condition for full participation in IEA. Ancillary benefits function as a complementary device of punishment scheme for IEA. Our main results show that ancillary benefits can facilitate full participation in IEA, thus suggesting that they should be considered in climate change negotiations.