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Endogenous Minimum Participation in International Environmental Treaties

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  • Carlo Carraro

    (University of Venice, CEPR, CEPS, CESifo and Fondazione Eni Enrico Mattei)

  • Carmen Marchiori

    (University College London and Fondazione Eni Enrico Mattei)

  • Sonia Oreffice

    (University of Chicago and Fondazione Eni Enrico Mattei)

Abstract

Many international treaties come into force only after a minimum number of countries have signed and ratified the treaty. Why do countries agree to introduce a minimum participation constraint among the rules characterising an international treaty? This question is particularly relevant in the case of environmental treaties dealing with global commons, where free-riding incentives are strong. Is a minimum participation rule a way to offset these free-riding incentives? Why do countries that know they have an incentive to free-ride accept to “tie their hands” through the introduction of a minimum participation constraint? This paper addresses the above questions by analysing a three-stage non-cooperative coalition formation game. In the first stage, countries set the minimum coalition size that is necessary for the treaty to come into force. In the second stage, countries decide whether to sign the treaty. In the third stage, the equilibrium values of the decision variables are set. At the equilibrium, both the minimum participation constraint and the number of signatories – the coalition size – are determined. This paper shows that a non-trivial partial coalition, sustained by a binding minimum participation constraint, forms at the equilibrium. This paper thus explains why in international negotiations all countries often agree on a minimum participation rule even when some of them do not intend to sign the treaty. The paper also analyses the optimal size of the minimum participation constraint.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2003.113.

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Date of creation: Dec 2003
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Handle: RePEc:fem:femwpa:2003.113

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Keywords: Agreements; Climate; Negotiations; Policy; Incentives;

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References

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  1. Carraro, Carlo & Marchiori, Carmen, 2002. "Stable Coalitions," CEPR Discussion Papers 3258, C.E.P.R. Discussion Papers.
  2. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
  3. CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  5. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
  6. Santiago J. Rubio & Alistair Ulph, 2006. "Self-enforcing international environmental agreements revisited," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 233-263, April.
  7. Ray, D. & Vohra, R., 1996. "A Theory of Endogenous Coalition Structure," Papers 68, Boston University - Industry Studies Programme.
  8. EYCKMANS, Johan & TULKENS, Henry, . "Simulating coalitionally stable burden sharing agreements for the climate change problem," CORE Discussion Papers RP -1677, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  9. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
  10. CHANDER, Parkash & TULKENS, Henry, 1994. "A Core-Theoretic Solution for the Design of Cooperative Agreements on Transfrontier Pollution," CORE Discussion Papers 1994048, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Effrosyni Diamantoudi & Eftichios Sartzetakis, 2002. "Stable International Environmental Agreements: An Analytical Approach," Others 0201001, EconWPA.
  12. Carraro, Carlo & Siniscalco, Domenico, 1992. "The international dimension of environmental policy," European Economic Review, Elsevier, vol. 36(2-3), pages 379-387, April.
  13. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
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