Identity and equal treatment in negative externality agreements
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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.
KeywordsAgreements 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.
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