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Largest Consistent Set in International Environmental Agreements

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  • Giovanni Villani

    ()

  • Marta Biancardi

Abstract

In this paper we study the formation and the stability of International Environmental Agreements (IEAs) in a pollution abatement model with a quadratic cost function. Countries play a two-stage game: in the first stage each country decides to join or not the coalition while, in the -second stage, the quantity of pollution abatement is chosen. To analyze the stability of coalition structures in a multiple coalition game, we use the notion of the Largest Consistent Set (LCS) which allows players to be farsighted.In an abstract context, Chwe (1994) developed the concept of farsighted stability: an outcome is stable and it is in the LCS if and only if deviations from it or potential further deviations are not unanimously preferred to the original outcome by the coalition considering the deviations. Applying this notion of stability in the IEA context we assume that, when a country or a sub-coalition contemplate exiting or joining an agreement, it takes into account the reactions of other countries ignited by its own actions. We identify what would be the resulting stable structures and the LCS, examining the indicator of countries’ environmental awareness proposed by the model. A particular analysis is proposed about the Grand Coalition. Moreover, we present a handy Maple algorithm to compare the cost functions and to determine direct dominance.

Suggested Citation

  • Giovanni Villani & Marta Biancardi, 2011. "Largest Consistent Set in International Environmental Agreements," Quaderni DSEMS 04-2011, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia.
  • Handle: RePEc:ufg:qdsems:04-2011
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    References listed on IDEAS

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    1. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, May.
    2. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, "undated". "International Environmental Agreements -The Role of Foresight," Economics Working Papers 2002-10, Department of Economics and Business Economics, Aarhus University.
    3. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    4. Marta Biancardi & Giovanni Villani, 2010. "International Environmental Agreements with Asymmetric Countries," Computational Economics, Springer;Society for Computational Economics, vol. 36(1), pages 69-92, June.
    5. de Zeeuw, Aart, 2008. "Dynamic effects on the stability of international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 163-174, March.
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    11. Ana Mauleon & Vincent Vannetelbosch, 2004. "Farsightedness and Cautiousness in Coalition Formation Games with Positive Spillovers," Theory and Decision, Springer, vol. 56(3), pages 291-324, May.
    12. 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.
    13. M Sáiz & Eligius Hendrix & Niels Olieman, 2006. "On the Computation of Stability in Multiple Coalition Formation Games," Computational Economics, Springer;Society for Computational Economics, vol. 28(3), pages 251-275, October.
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    More about this item

    Keywords

    IEA; Farsightedness; Implementation.;

    JEL classification:

    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General

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