Does leadership promote a cleaner climate?

Abstract

The Paris Agreement encourages developed countries to lead in reducing emissions. Using a model of national emissions, I examine whether leadership improves global welfare. The results suggest that leadership reduces global emissions when the leader's abatement generates cost‐reducing spillover effects or conveys private information about abatement costs. With spillover effects, the leader abates more to incentivize a greater reduction of emissions by followers. Under private information, the leader abates more to signal the abatement cost. If it has to choose between transparency and no transparency, the leader commits to transparency despite this being inefficient. Besides, I find sequential abatement stable against unilateral deviation.