Bulletin n. 3/2006
December 2006
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • McGinty Matthew
    International environmental agreements among asymmetric nations
    in Oxford Economic Papers , Volume 59 Number 1 ,  2007 ,  45-62
    This paper generalizes the benchmark model of self-enforcing international environmental agreements (IEAs) by allowing for all possible coalitions of n asymmetric nations. Asymmetries introduce gains from trade in pollution permits, reducing the incentive to deviate from a properly designed agreement. Coalitions are stable when the aggregate payoff to members is greater than the sum of individual payoffs from leaving the coalition. A benefit-cost ratio rule is proposed which distributes any remaining surplus after each coalition member receives their payoff as a non-signatory. Simulations of 20 asymmetric nations illustrate that even when the gains to cooperation are large, IEAs can achieve substantial emissions reductions. For example, when the benefit-cost ratio is one, stable coalitions can result in 47% of the difference between the full and no cooperation outcomes, compared with 5% for symmetric nations. Furthermore, 72% of the global payoff difference is obtained, relative to 9% for symmetry.
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