Munich Personal RePEc Archive

Designing International Environmental Agreements under Participation Uncertainty

Mao, Liang (2017): Designing International Environmental Agreements under Participation Uncertainty.

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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.

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