International environmental problems: natural scientific framework; the history of global environmental policy; theoretical framework. Cost-effectiveness: the concept of cost-effectiveness; cost-effectiveness when countries differ in size; empirical relevance in case of carbon emissions; cost-effective policy instruments. Incentive compatibility: the choice of the internalization instrument; internal stabilization; external stabilization; unilateral measures; flexibility and framework provisions; conclusions. Enforcement and side payments: the model; an enforceable agreement with side payments; the case of three countries; conclusions. Financing incremental abatement costs under asymmetric information: agreements under perfect information; signalling incentives; transfers in the separating equilibrium; transfers in the pooling equilibrium; conclusions. Institutions for the global environment: the global environment facility; the Montreal Protocol Unilateral Fund; joint implementation. Summary and outlook: the scope and results of the study; future directions in international environmental policy.