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How the Rules of Coalition Formation Affect Stability of International Environmental Agreements

Author

Listed:
  • Michael Finus

    (Department of Economics, Hagen University, Germany)

  • Bianca Rundshagen

    (Department of Economics, Hagen University, Germany)

Abstract

This paper compares stability of international environmental agreements for six different rules of coalition formation under very general conditions (any type of heterogeneity between countries). The rules can be interpreted as different institutional settings in which treaty formations take place and/or different designs of agreements. We consider open and restricted open membership game as well as four exclusive membership games with different degrees of unanimity required to form coalitions. From a policy perspective, counterintuitively, it turns out that stability is higher under exclusive than under open membership and stability increases with the degree of unanimity. We discuss the policy implications of our result for future treaty-making.

Suggested Citation

  • Michael Finus & Bianca Rundshagen, 2003. "How the Rules of Coalition Formation Affect Stability of International Environmental Agreements," Working Papers 2003.62, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.62
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    References listed on IDEAS

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    1. Henry Tulkens & Parkash Chander, 1997. "The Core of an Economy with Multilateral Environmental Externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 26(3), pages 379-401.
    2. Carlo Carraro & Carmen Marchiori & Sonia Oreffice, 2009. "Endogenous Minimum Participation in International Environmental Treaties," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(3), pages 411-425, March.
    3. Michael Hoel & Kerstin Schneider, 1997. "Incentives to participate in an international environmental agreement," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 9(2), pages 153-170, March.
    4. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 279-293, August.
    5. EYCKMANS, Johan & FINUS, Michael, 2003. "Coalition formation in a global warming game : how the design of protocols affects the success of environmental treaty-making," CORE Discussion Papers 2003088, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Carlo Carraro & Carmen Marchiori, 2003. "Stable coalitions," Chapters,in: The Endogenous Formation of Economic Coalitions, chapter 5 Edward Elgar Publishing.
    7. 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.
    8. Johan Eyckmans & Henry Tulkens, 1999. "Simulating with RICE Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem," CESifo Working Paper Series 228, CESifo Group Munich.
    9. Eyckmans, Johan & Tulkens, Henry, 2003. "Simulating coalitionally stable burden sharing agreements for the climate change problem," Resource and Energy Economics, Elsevier, vol. 25(4), pages 299-327, October.
    10. Hart, Sergiu & Kurz, Mordecai, 1983. "Endogenous Formation of Coalitions," Econometrica, Econometric Society, vol. 51(4), pages 1047-1064, July.
    11. Finus, Michael & Rundshagen, Bianca, 1998. "Toward a Positive Theory of Coalition Formation and Endogenous Instrumental Choice in Global Pollution Control," Public Choice, Springer, vol. 96(1-2), pages 145-186, July.
    12. Michael Finus & Bianca Rundshagen, 2003. "A Non-cooperative Foundation of Core-Stability in Positive Externality NTU-Coalition Games," Working Papers 2003.31, Fondazione Eni Enrico Mattei.
    13. Finus, Michael & Tjotta, Sigve, 2003. "The Oslo Protocol on sulfur reduction: the great leap forward?," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 2031-2048, September.
    14. Scott Barrett, 1994. "The biodiversity supergame," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(1), pages 111-122, February.
    15. Rubio, S. & Ulph, A., 2002. "A simple dynamic model of international environmental agreements with a stock pollutant," Discussion Paper Series In Economics And Econometrics 0209, Economics Division, School of Social Sciences, University of Southampton.
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    Citations

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    Cited by:

    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, December.
    2. Michael Finus & Ekko Ierland & Rob Dellink, 2006. "Stability of Climate Coalitions in a Cartel Formation Game," Economics of Governance, Springer, vol. 7(3), pages 271-291, August.
    3. Dmitry Levando, 2016. "Non-cooperative equilibrium with multiple deviators," Working Papers 2016:15, Department of Economics, University of Venice "Ca' Foscari".
    4. Johan Eyckmans & Michael Finus, 2003. "Coalition Formation in a Global Warming Game: How the Design of Protocols Affects the Success of Environmental Treaty-Making," Energy, Transport and Environment Working Papers Series ete0317, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    5. Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December.
    6. Benjamin Jones & Michael Keen & Jon Strand, 2013. "Fiscal implications of climate change," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(1), pages 29-70, February.
    7. Michael Finus & Juan-Carlos Altamirano-Cabrera & Ekko Ierland, 2005. "The effect of membership rules and voting schemes on the success of international climate agreements," Public Choice, Springer, vol. 125(1), pages 95-127, July.
    8. Vihang Patel, 2005. "Coalition Strategies and Reduction of GHG Emissions," Game Theory and Information 0501002, EconWPA.

    More about this item

    Keywords

    Non-cooperative game theory; Rules of coalition formation; Stability;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General

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