International environmental agreements with support
Tinbergen Institute Discussion Paper 15-015/VIII
25 Pages Posted: 27 Jan 2015 Last revised: 8 Jul 2017
Date Written: July 1, 2017
We augment the standard cartel formation game from non-cooperative coalition theory, often applied in the context of international environmental agreements, with the possibility that singletons support coalition formation without becoming coalition members themselves. We assume their support takes the form of a monetary transfer to the coalition, in order to induce larger coalitions, higher levels of public good provision and higher payoffs. We show that, under mild conditions on the costs and benefits of contributing to the public good (e.g. abatement of greenhouse gas emissions), there exist equilibria with support. Allowing for support increases payoffs to each of three types of agents: members, supporters and free-riders.
Keywords: Coalition formation; Public goods; Support; Transfers; International Environmental Agreements
JEL Classification: C72, D02, H41, Q54
Suggested Citation: Suggested Citation