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International Environmental Agreements and the Paradox of Cooperation: Revisiting and Generalizing Some Previous Results

Author

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  • Michael Finus

    (University of Graz, Austria)

  • Francesco Furini

    (University of Hamburg, Germany and Università Ca’ Foscari Venezia, Italy)

  • Anna Viktoria Rohrer

    (University of Graz, Austria)

Abstract

In his seminal paper Barrett (1994) argued that international environmental agreements (IEAs) are typical not successful, which he coined “the paradox of cooperation”. Either self-enforcing IEAs are small and, hence, cannot achieve much or, if they are large, then the gains from cooperation are small. This message has been reiterated by several subsequent papers by and large. However, the determination of stable agreements and their evaluation have been predominantly derived for specific payoff functions and many conclusions are based on simulations. In this paper, we provide analytically solutions for the size of stable agreements, the paradox of cooperation and the underlying forces. Many of our results are a generalization of papers by Diamantoudi and Sartzetakis (2006), Rubio and Ulph (2006) and the recent paper by McGinty (2020).

Suggested Citation

  • Michael Finus & Francesco Furini & Anna Viktoria Rohrer, 2021. "International Environmental Agreements and the Paradox of Cooperation: Revisiting and Generalizing Some Previous Results," Graz Economics Papers 2021-05, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2021-05
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    References listed on IDEAS

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    1. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, May.
    2. Michael Finus & Alejandro Caparrós (ed.), 2015. "Game Theory and International Environmental Cooperation," Books, Edward Elgar Publishing, number 15345.
    3. Karp, Larry & Simon, Leo, 2013. "Participation games and international environmental agreements: A non-parametric model," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 326-344.
    4. El-Sayed, Abeer & Rubio, Santiago J., 2014. "Sharing R&D investments in cleaner technologies to mitigate climate change," Resource and Energy Economics, Elsevier, vol. 38(C), pages 168-180.
    5. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    6. Pavlova, Yulia & de Zeeuw, Aart, 2013. "Asymmetries in international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 18(1), pages 51-68, February.
    7. Bayramoglu, Basak & Finus, Michael & Jacques, Jean-François, 2018. "Climate agreements in a mitigation-adaptation game," Journal of Public Economics, Elsevier, vol. 165(C), pages 101-113.
    8. Richard Cornes & Roger Hartley, 2007. "Aggregative Public Good Games," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 201-219, April.
    9. 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.
    10. 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.
    11. Marrouch, Walid & Ray Chaudhuri, Amrita, 2016. "International Environmental Agreements: Doomed to Fail or Destined to Succeed? A Review of the Literature," International Review of Environmental and Resource Economics, now publishers, vol. 9(3-4), pages 245-319, September.
    12. Finus, Michael & McGinty, Matthew, 2019. "The anti-paradox of cooperation: Diversity may pay!," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 541-559.
    13. Santiago J. Rubio, 2017. "Sharing R&D investments in breakthrough technologies to control climate change," Oxford Economic Papers, Oxford University Press, vol. 69(2), pages 496-521.
    14. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.
    15. Santiago J. Rubio, 2018. "Self-Enforcing International Environmental Agreements: Adaptation and Complementarity," Working Papers 2018.29, Fondazione Eni Enrico Mattei.
    16. Matthew McGinty, 2020. "Leadership and Free-Riding: Decomposing and Explaining the Paradox of Cooperation in International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(2), pages 449-474, October.
    17. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
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    Cited by:

    1. Nahid Masoudi, 2022. "Designed to be stable: international environmental agreements revisited," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 22(4), pages 659-672, December.
    2. Alistair Ulph & David Ulph, 2023. "International Cooperation and Kantian Moral Behaviour – Complements or Substitutes?," Economics Discussion Paper Series 2302, Economics, The University of Manchester.

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    More about this item

    Keywords

    International environmental agreements; Stability; Paradox of cooperation.;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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