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Designing International Environmental Agreements under Participation Uncertainty

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  • Mao, Liang

Abstract

We analyze the design of international environmental agreement (IEA) by a three-stage coalition formation game. In stage one, a designer chooses an IEA rule which, depending on the coalition of signatories formed in stage two, specifies the action that each signatory should take in stage three. A certain degree of participation uncertainty exists in that each country intending to sign the IEA for its best interest has a probability to end up a non-signatory. An IEA rule is said to be optimal if it maximizes the expected payoff of each signatory. We provide an algorithm to determine an optimal rule, and show its advantage over some rules used in the literature.

Suggested Citation

  • Mao, Liang, 2017. "Designing International Environmental Agreements under Participation Uncertainty," MPRA Paper 86248, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:86248
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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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