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National Politics and International Agreements

International agreements about transnational issues are difficult to reach, as the examples of the Copenhagen summit or the never-ending discussions of the future of the European Union make clear. In this paper, we relate this difficulty to the political process and the conflicts of interest attached to an agreement, both within and between national electorates, related to national income distributions. We set up a political economy model of a two-country world economy, where an international agreement on the financing of an international public good has to be negociated by two elected national delegates. We prove that any international agreement involves higher taxes in both countries than in the case of no-agreement. If reachable, an IA may generate losers in either country. If the political process involves a constraint on tax rates, an agreement may or may not be reached. Finally, when an agreement is reached, it may exhibit strategic delegation when the median voters are the Condorcet winners in both countries : this delegation is the outcome of the struggle by electorates to transfer the tax burden to the other country's taxpayers. In brief, the fate of an international agreements depends on national politics and distributive issues in the involved countries.

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Paper provided by Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne in its series Documents de travail du Centre d'Economie de la Sorbonne with number 10052.

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Length: 35 pages
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:mse:cesdoc:10052
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  1. Lange, Andreas & Vogt, Carsten & Ziegler, Andreas, 2006. "On the Importance of Equity in International Climate Policy: An Empirical Analysis," ZEW Discussion Papers 06-42, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Bode, Sven, 2003. "Equal emissions per capita over time : a proposal to combine responsibility and equity of rights," HWWA Discussion Papers 253, Hamburg Institute of International Economics (HWWA).
  3. Hubert Kempf & Stéphane Rossignol, 2005. "Is Inequality Harmful for the Environment in a Growing Economy?," Working Papers 2005.5, Fondazione Eni Enrico Mattei.
  4. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
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  6. Grégoire ROTA-GRAZIOSI, 2006. "On the strategic use of representative democracy in international agreements," Working Papers 200624, CERDI.
  7. Alesina, Alberto F & Angeloni, Ignazio & Etro, Federico, 2003. "International Unions," CEPR Discussion Papers 3913, C.E.P.R. Discussion Papers.
  8. Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, June.
  9. Bård Harstad, 2007. "Harmonization and Side Payments in Political Cooperation," American Economic Review, American Economic Association, vol. 97(3), pages 871-889, June.
  10. Lasse Ringius & Asbjørn Torvanger & Arild Underdal, 2002. "Burden Sharing and Fairness Principles in International Climate Policy," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 2(1), pages 1-22, March.
  11. Leo Wangler & JJuan-Carlos Altamirano-Cabrera & Hans-Peter Weikard, 2011. "The Political Economy of International Environmental Agreements: A Survey," Jena Economic Research Papers 2011-038, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  12. Besley, Timothy & Coate, Stephen, 2003. "Centralized versus decentralized provision of local public goods: a political economy approach," Journal of Public Economics, Elsevier, vol. 87(12), pages 2611-2637, December.
  13. Bagwell,K. & Staiger,R.W., 1998. "An economic theory of GATT," Working papers 15, Wisconsin Madison - Social Systems.
  14. Thomson, W., 1989. "Cooperative Models Of Bargaining," RCER Working Papers 177, University of Rochester - Center for Economic Research (RCER).
  15. Lange, Andreas & Vogt, Carsten, 2001. "Cooperation in international environmental negotiations due to a preference for equity," ZEW Discussion Papers 01-14, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  16. repec:reg:rpubli:452 is not listed on IDEAS
  17. Paola Conconi & Nicolas Sahuguet, 2009. "Policymakers' Horizon and the Sustainability of International Cooperation," ULB Institutional Repository 2013/98547, ULB -- Universite Libre de Bruxelles.
  18. Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2005. "International Environmental Agreements and Strategic Voting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 175-195, 03.
  19. Koremenos, Barbara & Lipson, Charles & Snidal, Duncan, 2001. "The Rational Design of International Institutions," International Organization, Cambridge University Press, vol. 55(04), pages 761-799, September.
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