Identity and equal treatment in negative externality agreements

  • Anna A. KlisEmail author
Original Paper


This paper examines the interaction of two types of provisions in international environmental agreements: an identity-based minimum participation clause (MPC) and an equal treatment provision. While MPCs have been widely studied in the context of multilateral agreements, this paper is the first to formally introduce treaties specifying equal proportional reductions from the no-treaty equilibrium for all participants. Does the presence of these two provisions assist or impede the formation and efficiency of the grand coalition? In cases of equal treatment and heterogeneity of agents, smaller coalitions may result in higher welfare than requiring the grand coalition. Using game theoretic analysis of a set of games, this paper gives a set of sufficient conditions for this welfare result to hold in a one-shot negative externality coalition game and presents examples of when smaller agreements do, and do not, improve upon unanimity. Furthermore, this paper focuses on how the choice of negotiation rules affects the optimal set of signatories. By specifying equal treatment (e.g. a proportional reduction rule) in a treaty, gains to the “narrow but deep” approach may warrant a smaller coalition.


Agreements Equal treatment Exclusive coalition Minilateralism Minimum participation Negative externality 







International environmental agreements


Minimum participation constraint


Paris Climate Change Agreement


World Trade Organization



My greatest thanks go to Maxwell Stinchcombe, my former advisor and mentor, as well as to Matthew McGinty, for their insight on this paper, which is a revised version of my PhD dissertation (UT Austin, 2015). I also thank Hans-Peter Weikard, Dale Stahl, Thomas Wiseman, Esther Raizen, and participants in UT Austin’s theory writing seminars, the 3rd Texas Economic Theory Camp, the 25th Stony Brook International Conference on Game Theory, AEA/ASSA 2015, Illinois Economic Association 2016, and the NIU Faculty Development and Instructional Design Center Writing Group for their relevant input. Finally, I would like to express my gratitude to my colleagues Jeremy Groves and Colin Kuehl and to the many anonymous reviewers who gave their time to read and provide substantial comments on previous drafts of this paper.

Supplementary material

10784_2019_9456_MOESM1_ESM.pdf (175 kb)
Supplementary material 1 (pdf 175 KB)


  1. Anderson, R. M., & Zame, W. R. (2000). Genericity with infinitely many parameters. Advances in Theoretical Economics, 1, 1–62.Google Scholar
  2. Bagnoli, M., Lipman, B. L., & Bagnoli, M. (1989). Provision of public goods: Fully implementing the core through private contributions. The Review of Economic Studies, 56(4), 583–601.CrossRefGoogle Scholar
  3. Bagwell, K. (2009). Self-enforcing trade agreements and private information. National Bureau of Economic Research Working Paper Series No. 14812.Google Scholar
  4. Barrett, S. (1994). Self-enforcing international environmental agreements. Oxford Economic Papers, 46, 878–894.CrossRefGoogle Scholar
  5. Barrett, S., & Stavins, R. (2003). Increasing participation and compliance in international climate change agreements. International Environmental Agreements: Politics, Law and Economics, 3, 349–376.CrossRefGoogle Scholar
  6. Beron, K. J., Murdoch, J. C., & Vijverberg, W. P. M. (2003). Why cooperate? Public goods, economic power, and the Montreal Protocol. Review of Economics and Statistics, 85(2), 286–297.CrossRefGoogle Scholar
  7. Black, J., Levi, M. D., & de Meza, D. (1993). Creating a good atmosphere: Minimum participation for tackling the ‘Greenhouse Effect’. Economica, 60(239), 281–293.CrossRefGoogle Scholar
  8. Bloch, F., & Gomes, A. (2006). Contracting with externalities and outside options. Journal of Economic Theory, 127(1), 172–201.CrossRefGoogle Scholar
  9. Carraro, C. (2005). Institution design for managing global commons: Lessons from coalition theory. In G. Demange & M. Wooders (Eds.), Group formation in economics: Networks, clubs, and coalitions (pp. 354–380). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  10. Carraro, C., Marchiori, C., & Oreffice, S. (2009). Endogenous minimum participation in international environmental treaties. Environmental and Resource Economics, 42(3), 411–425.CrossRefGoogle Scholar
  11. Center for International Earth Science Information Network (CIESIN)/Columbia University, United Nations Environmental Programme (UNEP), Fletcher School of Law and Diplomacy (FSLD)/Tufts University, British Columbia Ministry of Environment/Lands/Parks (BCMELP), Antarctic Cooperative Research Centre (ACRC), and American Society of International Law (ASIL) (2002). Socioeconomic Data and Applications Center (SEDAC) Collection of Treaty Texts.Google Scholar
  12. Chander, P., & Tulkens, H. (1997). The core of an economy with multilateral environmental externalities. International Journal of Game Theory, 26, 379–401.CrossRefGoogle Scholar
  13. Chou, P. B., & Sylla, C. (2008). The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities. International Environmental Agreements: Politics, Law and Economics, 8(4), 317–341.CrossRefGoogle Scholar
  14. Corbae, D., Stinchcombe, M. B., & Zeman, J. (2009). An introduction to mathematical analysis for economic theory and econometrics. Princeton: Princeton University Press.Google Scholar
  15. Cornes, R., & Sandler, T. (1996). The theory of externalities, public goods, and club goods (2nd ed.). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  16. Crooks, E. (2014). States feel unequal burden of carbon reduction targets. Financial Times, 32–33. Accessed 4 June 2014.
  17. Dinar, A., & Howitt, R. E. (1997). Mechanisms for allocation of environmental control cost: Empirical tests of acceptability and stability. Journal of Environmental Management, 49(2), 183–203.CrossRefGoogle Scholar
  18. Eckersley, R. (2012). Moving forward in the climate negotiations: Multilateralism or minilateralism? Global Environmental Politics, 12(2), 24–42.CrossRefGoogle Scholar
  19. Eyckmans, J., & Finus, M. (2007). Measures to enhance the success of global climate treaties. International Environmental Agreements: Politics, Law and Economics, 7(1), 73–97.CrossRefGoogle Scholar
  20. Finus, M. (2008). Game theoretic research on the design of international environmental agreements: Insights, critical remarks, and future challenges. International Review of Environmental and Resource Economics, 2(1), 29–67.CrossRefGoogle Scholar
  21. Finus, M., & Maus, S. (2008). Modesty may pay!. Journal of Public Economic Theory, 10(5), 801–826.CrossRefGoogle Scholar
  22. Finus, M., & Rundshagen, B. (2009). Membership rules and stability of coalition structures in positive externality games. Social Choice and Welfare, 32, 389–406.CrossRefGoogle Scholar
  23. Gilles, R. P., Haller, H. H., & Ruys, P. H. M. (1998). Semi-core equivalence. Economic Theory, 11(1), 101–127.CrossRefGoogle Scholar
  24. Hannesson, R. (2010). The coalition of the willing: Effect of country diversity in an environmental treaty game. The Review of International Organizations, 5(4), 461–474.CrossRefGoogle Scholar
  25. Harrison, R., & Lagunoff, R. (2017). Dynamic mechanism design for a global commons. International Economic Review, 58(3), 751–782.CrossRefGoogle Scholar
  26. Hovi, J., Ward, H., & Grundig, F. (2015). Hope or despair? Formal models of climate cooperation. Environmental and Resource Economics, 62(4), 665–688.CrossRefGoogle Scholar
  27. Lise, W., & Tol, R. S. J. (2004). Attainability of international environmental agreements as a social situation. International Environmental Agreements: Politics, Law and Economics, 4(3), 253–277.CrossRefGoogle Scholar
  28. Ludema, R. D., & Mayda, A. M. (2009). Do countries free ride on MFN? Journal of International Economics, 77(2), 137–150.CrossRefGoogle Scholar
  29. Malawski, M. (2002). Equal treatment, symmetry and Banzhaf value axiomatizations. International Journal of Game Theory, 31(1), 47–67.CrossRefGoogle Scholar
  30. McEvoy, D. M., Cherry, T. L., & Stranlund, J. K. (2015). Endogenous minimum participation in international environmental agreements: An experimental analysis. Environmental and Resource Economics, 62(4), 729–744.CrossRefGoogle Scholar
  31. McGinty, M. (2007). International environmental agreements among asymmetric nations. Oxford Economic Papers, 59(1), 45–62.CrossRefGoogle Scholar
  32. McGinty, M. (2009). International environmental agreements as evolutionary games. Environmental and Resource Economics, 45(2), 251–269.CrossRefGoogle Scholar
  33. McGinty, M., Milam, G., & Gelves, A. (2012). Coalition stability in public goods provision: Testing an optimal allocation rule. Environmental and Resource Economics, 52(3), 327–345.CrossRefGoogle Scholar
  34. Nordhaus, W. (2015). Climate clubs: Overcoming free-riding in international climate policy. The American Economic Review, 105(4), 1339–1370.CrossRefGoogle Scholar
  35. Nowak, M. A., Page, K. M., & Sigmund, K. (2000). Fairness versus reason in the ultimatum game. Science, 289(2000), 1773–1775.CrossRefGoogle Scholar
  36. Olson, M. (1971). The logic of collective action: Public goods and the theory of groups (2nd ed.)., Harvard economic studies Cambridge: Harvard University Press.Google Scholar
  37. Ray, D., & Vohra, R. (2001). Coalitional power and public goods. Journal of Political Economy, 109(6), 1355–1385.CrossRefGoogle Scholar
  38. Ricke, K. L., Moreno-Cruz, J. B., & Caldeira, K. (2013). Strategic incentives for climate geoengineering coalitions to exclude broad participation. Environmental Research Letters, 8(1), 14021.CrossRefGoogle Scholar
  39. Ringius, L., Torvanger, A., & Underdal, A. (2002). Burden sharing and fairness principles in international climate policy. International Environmental Agreements: Politics, Law and Economics, 2(1), 1–22.CrossRefGoogle Scholar
  40. Samuelson, P. A. (1954). The pure theory of public expenditure. The Review of Economics and Statistics, 36(4), 387–389.CrossRefGoogle Scholar
  41. Tulkens, H. (1998). Cooperation vs. free riding in international environmental affairs: Two approaches. In N. Hanley & H. Folmer (Eds.), Game theory and the environment (pp. 30–44). Cheltenham: Edward Elgar.Google Scholar
  42. United Nations. (1987). Montreal protocol on substances that deplete the ozone layer. United Nations Treaties Series (Vol. 1522, p. 3). New York.
  43. Vogt, C. (2016). Climate coalition formation when players are heterogeneous and inequality averse. Environmental and Resource Economics, 65(1), 33–59.CrossRefGoogle Scholar
  44. Wagner, U. J. (2001). The design of stable international environmental agreements: Economic theory and political economy. Journal of Economic Surveys, 15(3), 377–411.CrossRefGoogle Scholar
  45. Weikard, H.-P., Wangler, L., & Freytag, A. (2015). Minimum participation rules with heterogeneous countries. Environmental and Resource Economics, 62(4), 711–727.CrossRefGoogle Scholar
  46. Yi, S.-S. (1997). Stable coalition structures with externalities. Games and Economic Behavior, 20, 201–237.CrossRefGoogle Scholar

Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Department of EconomicsNorthern Illinois UniversityDeKalbUSA
  2. 2.NIU Institute for the Study of the Environment, Sustainability, and EnergyDeKalbUSA

Personalised recommendations