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Free-riding in International Environmental Agreements: A Signaling Approach to Non-Enforceable Treaties

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  • Ana Espinola-Arredondo
  • Felix Munoz-Garcia

    ()
    (School of Economic Sciences, Washington State University)

Abstract

This paper examines countries’ free-riding incentives in international environmental agreements (IEAs) when, first, the treaty is non-enforceable, and second, countries do not have complete information about other countries’ noncompliance cost. We analyze a signaling model whereby the country leading the negotiations of the international agreement can reveal its own noncompliance costs through the commitment level it signs in the IEA. Our results show that countries’ probability to join the IEA is increasing in the free-riding benefits they can obtain from other countries’ compliance, and decreasing in their own noncompliance costs. This paper shows that, when free-riding incentives are strong enough, there is no equilibrium in which all types of countries join the IEA. Despite not joining the IEA, countries invest in clean technologies. Finally, we relate our results with some common observations in international negotiations.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/AnaEspinola/WP2009-8.pdf
File Function: First version, 2009
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Bibliographic Info

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2009-08.

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Length: 27 pages
Date of creation: Mar 2009
Date of revision:
Handle: RePEc:wsu:wpaper:munoz-3

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Keywords: Signaling games; environmental agreements; nonbinding negotiations; noncompliance cost;

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References

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  1. Brandt, Urs Steiner, 2004. "Unilateral actions, the case of international environmental problems," Resource and Energy Economics, Elsevier, vol. 26(4), pages 373-391, December.
  2. Scott Barrett, 1994. "The biodiversity supergame," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 4(1), pages 111-122, February.
  3. Henk Folmer & Pierre Mouche & Shannon Ragland, 1993. "Interconnected games and international environmental problems," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 3(4), pages 313-335, August.
  4. Lange, Andreas & Vogt, Carsten, 2003. "Cooperation in international environmental negotiations due to a preference for equity," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2049-2067, September.
  5. Ana Espinola-Arredondo, 2009. "Free-Riding and Cooperation in Environmental Games," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 11(1), pages 119-158, 02.
  6. Santiago Rubio & Alistair Ulph, 2003. "An Infinite-Horizon Model of Dynamic Membership of International Environmental Agreements," Working Papers 2003.57, Fondazione Eni Enrico Mattei.
  7. Bac, Mehmet, 1996. "Incomplete Information and Incentives to Free Ride on International Environmental Resources," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 301-315, May.
  8. Whalley, John, 1991. "The Interface between Environmental and Trade Policies," Economic Journal, Royal Economic Society, vol. 101(405), pages 180-89, March.
  9. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
  10. Putnam, Robert D., 1988. "Diplomacy and domestic politics: the logic of two-level games," International Organization, Cambridge University Press, vol. 42(03), pages 427-460, June.
  11. 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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Cited by:
  1. Ana Espinola-Arredondo & Felix Munoz-Garcia, 2010. "Keeping Negotiations in the Dark: Environmental Agreements under Incomplete Information," Working Papers 2010-20, School of Economic Sciences, Washington State University.

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