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Designing International Environmental Agreements under Participation Uncertainty

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  • Mao, Liang

Abstract

We analyze the design of optimal international environmental agreement (IEA) by a three-stage coalition formation game. A certain degree of participation uncertainty exists in that each country choosing to sign the IEA for its best interest has a probability to make a mistake and end up a non-signatory. The IEA rule, which specifies the action of each signatory for each coalition formed, is endogenously determined by a designer, whose goal is to maximize the expected payoff of each signatory. We provide an algorithm to determine an optimal rule and compare this rule to some popular rules used in the literature.

Suggested Citation

  • Mao, Liang, 2017. "Designing International Environmental Agreements under Participation Uncertainty," MPRA Paper 79145, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:79145
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    References listed on IDEAS

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    1. Mao, Liang, 2017. "A Note on Stable Cartels," MPRA Paper 83982, University Library of Munich, Germany, revised 18 Jan 2018.

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    More about this item

    Keywords

    International environmental agreement; coalition formation; participation uncertainty; stable coalition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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