International negotiations on acid rains in Northern Europe: a discrete time iterative process Marc Germain Philippe L. Toint Henri Tulkens Report 95/7 This paper proposes a dynamic model of international negotiations on transboundary pollution. The approach is characterized by a discrete time formulation (at variance with the continuous model of Kaitala et al. (1995)) and by a suitable reformulation of the local information assumption on cost and damage functions: at each stage of the negotiation, the parties assign the best possible cooperative state, given the available information, as an objective for the next stage. It is shown that the resulting sequence of states converges to a Pareto optimum in a finite number of stages. Furthermore, a financial transfers structure is formulated, which guarantees that the desired sequence of states is rational for the involved parties, at the individual as well as at the coalition level. The concepts are applied in a numerical simulation of the SO2 transboundary pollution problem relating to acid rains in Northern Europe. Note: The postcript file TR95-07.ps does not contain the figures. If you wish to obtain a complete paper copy of this report, please contact Ph Toint (pht@math.fundp.ac.be)