International Cooperation, Coalitions Stability and Free Riding in a Game of Pollution Control

We consider a set of countries that wish to sign an international agreement to control pollution. The problem is studied from the perspective of cooperative games and three possible definitions of the characteristic function of the game are analyzed. We further address the issue of free riding and the stability of coalitions. The challenge is to find a possible reconciliation of the two approaches. In other words, we are looking for a payment function which ensures the formation and stability of a large coalition, even if we consider that different countries are playing non-cooperatively and are acting only in their own interest. Our results suggest that it is difficult to deter free riding and that no large coalition can emerge if countries decide to play non-cooperatively.

[1]  Duncan K. Foley,et al.  Lindahl's Solution and the Core of an Economy with Public Goods , 1970 .

[2]  L. Shapley.  Cores of convex games , 1971 .

[3]  P. Champsaur,et al.  How to share the cost of a public good? , 1975 .

[4]  John A. Weymark,et al.  On the Stability of Collusive Price Leadership , 1983 .

[5]  J. Gabszewicz,et al.  On the Stability of Collusion , 1986 .

[6]  Hervé Moulin,et al.  Egalitarian-equivalent cost sharing of a public good , 1987 .

[7]  Scott Barrett,et al.  The problem of global environmental protection , 1990 .

[8]  Parkash Chander,et al.  Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems , 1992 .

[9]  Scott Barrett,et al.  International Environmental Agreements as Games , 1992 .

[10]  C. Carraro,et al.  Strategies for the international protection of the environment , 1993 .

[11]  P. Chander.  Dynamic Procedures and Incentives in Public Good Economies , 1993 .

[12]  S. Barrett.  Self-enforcing international environmental agreements , 1994 .

[13]  Parkash Chander,et al.  A core-theoretic solution for the design of cooperative agreements on transfrontier pollution , 1995 .

[14]  Veijo Kaitala,et al.  The Acid Rain Game as a Resource Allocation Process with an Application to the International Cooperation among Finland, Russia and Estonia , 1995 .

[15]  J. A. Filar,et al.  A regional allocation of world CO 2 emission reductions , 1997 .

[16]  Bianca Rundshagen,et al.  Toward a positive theory of coalition formation and endogenous instrumental choice in global pollution control , 1998 .

[17]  Johan Eyckmans,et al.  Simulating with Rice Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem , 1999, SSRN Electronic Journal.

[18]  G. Zaccour,et al.  Time-consistent Shapley value allocation of pollution cost reduction , 1999 .

[19]  Paul S. Gaertner.  Optimisation analysis and integrated models of the enhanced greenhouse effect , 2001 .

[20]  Stable International Environmental Agreements: An Analytical Approach , 2002 .

[21]  Philippe L. Toint,et al.  Transfers to Sustain Dynamic Core-Theoretic Cooperation in International Stock Pollutant Control , 2003 .