Self-Enforcing International Environmental Agreements

Dynamic Effects on the Stability of International Environmental Agreements

“…Under business-as-usual, without environmental concern, global emissions will grow over time with a factor b. 2 There are n countries (n > 2).…”

“…It follows that the costs in equilibrium for a coalition member (C c ) and for an outsider (C o ) are given by The usual approach to the theory on stable International Environmental Agreements (e.g., [5,2]) is based on the ideas developed for cartel stability ( [1]) and requires what is called internal and external stability. Internal stability means that a country does not have an incentive to leave the coalition, that is the costs of an outsider to the coalition of size m-1 must be larger than (or equal to) the costs of a member of the coalition of size m. External stability means that a country does not have an incentive to join the coalition, that is the costs of a member of the coalition of size m+1 must be larger than the costs of an outsider to the coalition of size m. This corresponds to the Nash equilibrium of the so-called open-membership game in which the countries first decide on whether they want to be a member of the coalition or not and then choose their abatement levels ( [4,17,11]).…”

“…The dominant strand in this literature is based on the idea of internal and external stability, meaning that an individual country neither has an incentive to leave nor to join the coalition ( [13,5,2]). For most models in this tradition, the outcome is rather grim: the size of the stable coalition is very small.…”

Participation in International Environmental Agreements: The Role of Timing and Regulation

“…Due to Proposition 6, it is sufficient for the support of our main result to find an example where the coalition structure with the grand coalition is not an equilibrium coalition structure in the sequential move unanimity game. This is shown in Table 3 below which assumes a payoff function as for instance in Barrett (1994) and in many other papers on international environmental agreements. …”

“…Moreover, in any coalition structure c and for any aggregate abatement level We summarize our observation from above in the following property. For payoff functions that imply dominant strategies, see for instance Botteon and Carraro (1997), Hoel (1992), Hoel and Schneider (1997), Petrakis and Xepapadeas (1996) as well as Stähler (1996) and for those that imply non-dominant strategies, see for example Barrett (1994), Diamantoudi and Sartzetakis (2001) and Finus and Rundshagen (1998 Note that Property 1a means for payoff functions implying dominant strategies that abatement levels of smaller coalitions will be lower than those of larger coalitions in every coalition structure and not only in a given coalition structure.…”