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Coalition-proof stability of international environmental agreements

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  • Ryusuke Shinohara

    (Hosei University)

Abstract

In a Nash equilibrium of participation games in international environmental agreements, the surplus-sharing rule proposed by Eyckmans and Finus (An almost ideal sharing scheme for coalition games with externalities. FEEM Working Paper No. 155.04, 2004), Carraro et al. (Rev Int Org 1:379–396, 2006), and Weikard (Manchester Sch 77:575–593, 2009) achieves the greatest economic welfare compared with any other feasible surplus-sharing rules. In this paper, we examine the robustness of their rule to multilateral deviations by focusing on a coalition-proof Nash equilibrium. We present a condition in which the rule is welfare-optimal among the feasible surplus-sharing rules in a coalition-proof Nash equilibrium. This condition indicates that the desirability of the rule is also observable in a coalition-proof Nash equilibrium in some cases that existing studies have examined. However, in other cases, their rule may not even accomplish the existence of coalition-proof Nash equilibria. As an alternative, we provide a surplus-sharing rule to achieve an equilibrium for all possible cases.

Suggested Citation

  • Ryusuke Shinohara, 2025. "Coalition-proof stability of international environmental agreements," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 27(2), pages 169-202, April.
    • Handle: RePEc:spr:envpol:v:27:y:2025:i:2:d:10.1007_s10018-024-00426-z
    DOI: 10.1007/s10018-024-00426-z
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    References listed on IDEAS

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    1. Chun, Youngsub, 1988. "The proportional solution for rights problems," Mathematical Social Sciences, Elsevier, vol. 15(3), pages 231-246, June.
    2. Sylvie Thoron, 1998. "Formation of a Coalition-Proof Stable Cartel," Canadian Journal of Economics, Canadian Economics Association, vol. 31(1), pages 63-76, February.
    3. Hans‐Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
    4. Milgrom, Paul & Roberts, John, 1996. "Coalition-Proofness and Correlation with Arbitrary Communication Possibilities," Games and Economic Behavior, Elsevier, vol. 17(1), pages 113-128, November.
    5. MATTHEW McGINTY, 2011. "A Risk‐Dominant Allocation: Maximizing Coalition Stability," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(2), pages 311-325, April.
    6. Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
    7. Johan Eyckmans & Michael Finus, 2004. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Energy, Transport and Environment Working Papers Series ete0414, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    8. 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.
    9. 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.
    10. Ryusuke Shinohara, 2010. "Coalition-proof equilibria in a voluntary participation game," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(4), pages 603-615, October.
    11. Ryusuke Shinohara, 2021. "Voluntary Participation in International Environmental Agreements and Authority Structures in a Federation: A Note," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(1), pages 25-32, May.
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    More about this item

    Keywords

    International environmental agreements; Voluntary participation; Surplus-sharing rule; Coalition-proof Nash equilibrium; Proportional cost-sharing rule;
    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

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