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Abstract:
Bargaining is ubiquitous in real-life. It is a major dimension of political and business activities. It appears at the international level, when governments negotiate on matters ranging from economic issues (such as the removal of trade barriers), to global security (such as fighting against terrorism) to environmental and related issues (e.g. climate change control). What factors determine the outcome of negotiations such as those mentioned above? What strategies can help reach an agreement? How should the parties involved divide the gains from cooperation? With whom will one make alliances? This paper addresses these questions by focusing on a non-cooperative approach to negotiations, which is particularly relevant for the study of international negotiations. By reviewing non-cooperative bargaining theory, non-cooperative coalition theory, and the theory of fair division, this paper will try to identify the connection among these different facets of the same problem in an attempt to facilitate the progress towards a unified framework.

Negotiation theory, Bargaining, Coalitions, Fairness, Agreements

Abstract:
The purpose of the paper is to review the applications of non-cooperative bargaining theory to water related issues - which fall in the category of formal models of negotiation. The ultimate aim is that to, on the one hand, identify the conditions under which agreements are likely to emerge, and their characteristics; and, on the other hand, to support policy makers in devising the rules of the game that could help obtain a desired result. Despite the fact that allocation of natural resources, especially of trans-boundary nature, has all the characteristics of a negotiation problem, there are not many applications of formal negotiation theory to the issue. Therefore, this paper first discusses the non-cooperative bargaining models applied to water allocation problems found in the literature. Particular attention will be given to those directly modelling the process of negotiation, although some attempts at finding strategies to maintain the efficient allocation solution will also be illustrated. In addition, this paper will focus on Negotiation Support Systems (NSS), developed to support the process of negotiation. This field of research is still relatively new, however, and NSS have not yet found much use in real life negotiation. The paper will conclude by highlighting the key remaining gaps in the literature.

Negotiation theory, Water, Agreements, Stochasticity, Stakeholders, Bragaining, Coalitions, Fairness

Abstract:
This Paper examines recent theoretical developments in the theory of coalition stability. It focuses on the relationship between the incentives to defect from a coalition, the size of the resulting equilibrium coalition structure and the different assumptions on membership rules, coalition behaviour, players' conjectures, etc. The Paper considers several cases. Simultaneous versus sequential moves, linear versus circular order of moves, Nash versus rational conjectures, open versus exclusive membership, monotonic versus non-monotonic payoff functions and orthogonal versus non-orthogonal reaction functions. The profitable and stable coalition will be derived for each possible configuration of the rules of the game, the pay-off functions and the membership rules. The results show that the size of the profitable and stable coalition highly depends on the chosen configuration and that the equilibrium outcome ranges from a small coalition with a few signatories to full cooperation. The Paper explores under which conditions a large stable coalition is likely to emerge, and identifies the institutional setting that favours the emergence of such coalition.

Agreements, coaltions, incentives, negotiations, stability

Abstract:
This paper examines recent theoretical developments of the theory of coalition stability. It focuses on the relationship between the incentives to defect from a coalition, the size of the resulting equilibrium coalition structure, and the different assumptions on membership rules, coalition behaviour, players' conjectures, etc. The paper considers several cases. Simultaneous vs. sequential moves, linear vs. circular order of moves, Nash vs. rational conjectures, open vs. exclusive membership, monotonic vs. non monotonic payoff functions, and orthogonal vs. non-orthogonal reaction functions. The profitable and stable coalition will be derived for each possible configuration of the rules of the game, the payoff functions and the membership rules. The results show that the size of the profitable and stable coalition highly depends on the chosen configuration and that the equilibrium outcome ranges from a small coalition with a few signatories to full cooperation. The paper explores under which conditions a large stable coalition is likely to emerge, and identifies the institutional setting that favours the emergence of such coalition.

Agreements, coalitions, incentives, negotiations, stability

Abstract:
The US decision not to ratify the Kyoto Protocol and the recent outcomes of the Bonn and Marrakech Conferences of the Parties drastically reduces the effectiveness of the Kyoto Protocol in controlling GHG emissions. The reason is not only the reduced emission abatement in the US, but also the spillover effects on technology and countries' relative bargaining power induced by the US decision. Therefore, it is crucial to analyse whether an incentive strategy exists that could induce the US to revise their decision and to comply with the Kyoto commitments. One solution, occasionally proposed in the literature and in actual policymaking, is to link negotiations on climate change control with decisions concerning international R&D cooperation. This Paper explores this idea by analysing on the one hand the incentives for EU, Japan and Russia to adopt this strategy, and on the other hand the incentives for the US to join a coalition which cooperates both on climate change control and on technological innovation. The extended regime in which cooperation takes place on both dimensions (GHG emissions and R&D) will be examined from the view-point of countries' profitability and free-riding incentives. Finally, after having assessed the effectiveness and credibility of the issue linkage strategy, we explore the economic and environmental benefits of a new, recently proposed regime, which aims at achieving GHG emission control by enhancing cooperation on technological innovation and diffusion (without targets on emissions).

Agreements, climate, incentives, negotiations, policy, technological change

Abstract:
The US decision not to ratify the Kyoto Protocol and the recent outcomes of the Bonn and Marrakech Conferences of the Parties drastically reduce the effectiveness of the Kyoto Protocol in controlling GHG emissions. The reason is not only the reduced emission abatement in the US, but also the spillover effects on technology and countries' relative bargaining power induced by the US decision. Therefore, it is crucial to analyse whether an incentive strategy exists that could induce the US to revise their decision and to comply with the Kyoto commitments. One solution, occasionally proposed in the literature and in actual policymaking, is to link negotiations on climate change control with decisions concerning international R&D cooperation. This paper explores this idea by analysing on the one hand the incentives for EU, Japan and Russia to adopt this strategy, and on the other hand the incentives for the US to join a coalition which cooperates both on climate change control and on technological innovation. The extended regime in which cooperation takes place on both dimensions (GHG emissions and R&D) will be examined from the view point of countries' profitability and free-riding incentives. Finally, after having assessed the effectiveness and credibility of the issue linkage strategy, we explore the economic and environmental benefits of a new, recently proposed regime, which aims at achieving GHG emission control by enhancing cooperation on technological innovation and diffusion (without targets on emissions).

Agreements, Climate, Incentives, Negotiations, Policy, Technological Change

Abstract:
This paper analyses issue linkage as a way to increase co-operation on issues where incentives to free-ride are strong. The goal is to determine under what conditions players prefer to link negotiations on two different issues rather than to negotiate on the two issues separately. Suppose that players are asked to vote on issue linkage before starting negotiations. Under what conditions would they vote in favour of issue linkage? The answer to this question is not trivial. Issue linkage may indeed increase the number of cooperators on the provision of a public good (a typical issue characterised by strong incentives to free-ride). However, at the same time, issue linkage may reduce the number of cooperating players on the other economic issue which is linked to the provision of a public good. Players therefore face a trade-off. This paper analyses this trade-off within a game-theoretic framework and shows under what conditions issue linkage is players' equilibrium strategy.

International Environmental Agreements, Coalition Formation Games, Issue Linkage

Abstract:
Many international treaties come into force only after a minimum number of countries have signed and ratified the treaty. Why do countries agree to introduce a minimum participation constraint among the rules characterizing an international treaty? This question is particularly relevant in the case of environmental treaties dealing with global commons, where free-riding incentives are strong. Is a minimum participation rule a way to offset these free-riding incentives? Why do countries that know they have an incentive to free-ride accept to 'tie their hands' through the introduction of a minimum participation constraint? This Paper addresses the above questions by analysing a three-stage non-cooperative coalition formation game. In the first stage, countries set the minimum coalition size that is necessary for the treaty to come into force. In the second stage, countries decide whether to sign the treaty. In the third stage, the equilibrium values of the decision variables are set. At the equilibrium, both the minimum participation constraint and the number of signatories - the coalition size - are determined. This Paper shows that a non-trivial partial coalition, sustained by a binding minimum participation constraint, forms at the equilibrium. This Paper thus explains why in international negotiations all countries often agree on a minimum participation rule even when some of them do not intend to sign the treaty. The Paper also analyses the optimal size of the minimum participation constraint.

Agreements, climate, negotiation, policy, incentives

Abstract:
Many international treaties come into force only after a minimum number of countries have signed and ratified the treaty. Why do countries agree to introduce a minimum participation constraint among the rules characterising an international treaty? This question is particularly relevant in the case of environmental treaties dealing with global commons, where free-riding incentives are strong. Is a minimum participation rule a way to offset these free-riding incentives? Why do countries that know they have an incentive to free-ride accept to tie their hands through the introduction of a minimum participation constraint? This paper addresses the above questions by analysing a three-stage non-cooperative coalition formation game. In the first stage, countries set the minimum coalition size that is necessary for the treaty to come into force. In the second stage, countries decide whether to sign the treaty. In the third stage, the equilibrium values of the decision variables are set. At the equilibrium, both the minimum participation constraint and the number of signatories - the coalition size - are determined. This paper shows that a non-trivial partial coalition, sustained by a binding minimum participation constraint, forms at the equilibrium. This paper thus explains why in international negotiations all countries often agree on a minimum participation rule even when some of them do not intend to sign the treaty. The paper also analyses the optimal size of the minimum participation constraint.

Agreements, Climate, Negotiations, Policy, Incentives