Strategic Delegation in the Formation of Modest International Environmental Agreements

Spycher, Sarah; Winkler, Ralph (December 2020). Strategic Delegation in the Formation of Modest International Environmental Agreements (CESifo Working Papers 8769). Munich: CESifo

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We reassess the well-known “narrow-but-deep” versus “broad-but-shallow” trade-off in international environmental agreements (IEAs), taking into account the principal-agent relationship induced by the hierarchical structure of international policy. To this end, we expand the modest coalition formation game, in which countries first decide on whether to join an agreement and then decide on emissions by a strategic delegation stage. In the weak delegation game, principals first decide whether to join an IEA, then delegate the domestic emission choices to an agent. Finally, agents in all countries decide on emissions. In countries not joining the IEA, agents choose emissions to maximize their own payoff, while agents of countries joining the IEA set emissions to internalize some exogenously given fraction of the externalities that own emissions cause on all members of the IEA. In the strong delegation game principals first delegate to agents, which then decide on membership and emissions. We find that strategic delegation crowds out all efforts to increase coalition sizes by less ambitious agreements in the weak delegation game, while in the strong delegation game the first-best from the principals’ point of view can be achieved.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Spycher, Sarah and Winkler, Ralph

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

2364-1428

Series:

CESifo Working Papers

Publisher:

CESifo

Language:

English

Submitter:

Dino Collalti

Date Deposited:

12 Jan 2021 15:31

Last Modified:

12 Jan 2021 15:35

URI:

https://boris.unibe.ch/id/eprint/150783

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