Designed to be stable: international environmental agreements revisited

In a three-stage game, we revisit the non-cooperative coalition approaches into international environmental agreements by tackling a fundamental design flaw in these approaches. We show how a treaty can effectively remove the free-riding problem from its roots by farsightedly choosing its members’ emissions. We prove that under this approach, the grand coalition is a self-enforcing equilibrium. We will argue how the modified timing of the coalition game suggested in this article is more realistic and consistent with real-world practices. Another advantage of the farsighted rule is its simplicity and applicability to all coalition game settings, regardless of whether agents are homogeneous or heterogeneous.