Free-Rider Problem and Sovereignty Protection in the Global Commons

Abstract

This study investigates a free-rider problem in long-term relationships for maintaining the global commons without the help of compulsory top-down governance, where, due to the non-excludable nature of the commons, each player attempts to seek loopholes to impose the burden of cooperation on other players. The players establish a committee that demands that each player select an action as promised by a pre-set commitment rule, contingent on all players’ announcements. The rule must be sustainable, that is, robust against renegotiations that exclude a player who takes an uncooperative attitude on purpose from the committee. We require the committee to protect player sovereignty in that no player is forced to carry out high cooperation levels against their will or receive future retaliation from the other players for their low commitment. Many methods for resolving the free-rider problem such as the common commitment rule, the climate club, and pledge and review approach fail to make rule sustainability compatible with sovereignty protection. This study demonstrates a new method called the cautious commitment rule, according to which, the committee makes each player a promise that is not necessarily the same as, but close to, and not greater than, their announced upper limit. We show that by adopting this rule, the committee can solve the free-rider problem comprehensively while adhering to sovereignty protection and rule sustainability. As an application, we investigate global warming and show that adopting the cautious commitment rule is crucial for solving the global commons issue that all countries have long faced in international negotiation. It provides a sensible path to solving the global commons without falling into the Westphalia dilemma.

Keywords: Free-Rider Problem, Global Commons, Sovereignty Protection, Rule Sustainability, Cautious Commitment Rule.

JEL Classification: C72, D74, D91, H41, H77, Q54.