Abstract
This paper investigates the existence of international environmental agreements (IEAs) that are both fair and stable. We set up a cooperative game with multilateral environmental externalities in which countries form agreements that allocate emission reduction targets. A global agreement is stable against any sized coalition of countries leaving if the payoff allocation from the agreement is in the γ-core. We first use the Bondareva-Shapley Balancedness Theorem to show that for this game the γ-core is non-empty. We then restrict the set of feasible emission reduction targets to those satisfying a fairness constraint introduced by Athanasoglou (2022). We find that the fairness constrained game does not in general have a non-empty γ-core, which implies that when a global agreement is required to satisfy a concept of fairness, it does not always remain stable against a coalition of countries leaving the agreement. This paper contributes to the literature in two ways. First, by incorporating a concept of fairness, it extends the models of Helm (2001) and Stamatopoulos (2020) which considered γ-core allocations in an economy with multilateral environmental externalities. Second, by allowing for deviations of coalitions of any size, it extends the model of Athanasoglou (2022) which investigated the existence of a fair IEA which is stable against a single country leaving.
The seminar will be held in room 1140 (11th floor) at Eilert Sundts Hus. The address is Moltke Moes vei 31.