financial mechanism and enforceability of international environmental agreements we examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods in the present model the forces creating international agreement are a politician s motive for re election and a financial mechanism for compliance if a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement and is aware that his ex post deviation will be deterred by the financial mechanism he too decides to participate in the agreement which then corrects externality problems

on the endogenous allocation of decision powers in federal structures abstract this paper provides a political economy explanation of the degree of centralization in economic policy making to determine which policies are to be centralized regions select representatives who then negotiate the degree of centralization and the regional cost shares of centrally decided policies we show that the resulting degree of centralization is suboptimally low voters strategically delegate to representatives who are averse to public spending and hence prefer decentralized decisions in order to reduce their region s cost share when spillovers are asymmetric strategic delegation is stronger at the periphery than at the center

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

who should abate carbon emission we review the optimal pattern of carbon emission abatements across countries in a simple multi country world we model explicitly with the model in chichilnisky 4 the fact that the atmosphere is a public good within this framework we establish conditions for it to be necessary for optimality that the marginal cost of abatement be the same in all countries these condition are quite restrictive and amount to either ignoring distributional issues between countries or operating within a framework within which lump sum transfers can be made between countries these results have implications for the use of tradeable emission permits which as normally advocated will lead to the equalization of marginal abatement costs across countries the observation that the atmosphere is a public good implies that we may need to look at a lindahl equilibrium rather than a walrasian equilibrium in tradeable permits

an experimental examination of the volunteer s dilemma the volunteer s dilemma is an n person binary choice game in which a single contributor volunteer is all that is needed for a given benefit to be enjoyed by all players examples include casting a politically costly veto or attempting an emergency rescue the contribution decision is costly and the symmetric nash equilibrium involves mixed strategies these nash predictions have the intuitive property that the probability of volunteering is a decreasing function of the number of players there is however a surprising feature the equilibrium probability of obtaining no volunteers is increasing in the number of players and may be quite large depending on parameters even as the number of players goes to infinity these predictions are evaluated with a laboratory experiment the data show deviations from both nash and quantal response equilibria and alternative explanations e g a combination of quantal response and inequity aversion are explored note most of this is from an earlier version that was only based on data from uva for group sizes of 2 3 and 6 the power point has the new data

the voluntary provision of a pure public good the case of reduced cfc emissions and the montreal protocol abstract this paper applies the theory of the voluntary provision of a pure public good to the behavior of nations to curb chlorofluorocarbon cfc emissions during the late 1980s by devising an empirical test we determine that these cutbacks in emissions are consistent with nash behavior when taste parameters are controlled the relationship between emission cutbacks and national income is nearly linear as implied by the theory if the sample is purged of potential outliers then the linear relationship results a significant taste parameter is the extent of political and civil freedoms while a marginally significant parameter is geophysical position in terms of latitude

strategic delegation in bargaining abstract principals have the opportunity to delegate to an agent in the context of the nash bargaining model this paper resolves a shortcoming in the related bargaining literature in equilibrium a symmetric outcome typically will not result and multiple equilibria exist

majority voting with single crossing preferences we clarify and extend a number of sufficient conditions for the existence of a majority voting equilibrium on one dimensional choice domains these conditions variously stated in the previous literature all impose order restrictions on voter preferences for instance monotone marginal rates of substitution which we show to imply or be equivalent to a general ordinal version of the single crossing condition this simple property is economically intuitive and easily checked in applications this ease of application is demonstrated through an examination of voting models of redistributive income taxation and trade union bargaining behaviour

delegation and threat in bargaining abstract two principals nations appoint one agent each to bargain over the provision of a public good two institutional set ups are studied each with a different level of authority given to the agents here authority means the right to decide the own side s provision if negotiations break down in equilibrium the principals choose agents with preferences differing from their own the low authority equilibrium pareto dominates with regard to the principals the case of the principals deciding on the provisions simultaneously autarchy the high authority equilibrium is pareto dominated by the low authority equilibrium and it may even be dominated by autarchy journal of economic literatureclassification numbers c71 and c72

cross border externalities and cooperation among representative democracies abstract this paper analyzes the provision of public goods with cross border externalities by representative democracies the level of provision of each country is decided by a policy maker elected by majority rule at the country level we compare the case in which policy makers set their policies noncooperatively with the case in which they set their policies through coasian cooperation cooperation induces policy makers to internalize cross border externalities but it also induces strategic voters to elect a policy maker who cares less about the public good to reduce their public good contribution the former effect increases public good provision while the latter reduces it we show that once voters incentives are taken into account whether cooperation is beneficial depends neither on voters preferences nor on the magnitude of spillovers nor on the size bargaining power or efficiency of each country instead it depends only on the curvature of the demand for the public good cooperation increases decreases public good provision when the demand function is more less convex than the unit elastic demand function hence the desirability of international cooperation depends mostly on the type of public good considered

negotiating environmental agreements regional or federal authority abstract this paper examines the possible strategic advantage enjoyed by a country when its regional governments negotiate international environmental agreements rather than the federal government a model in which two countries negotiate an international agreement on the abatement of a shared pollutant is developed each country s exogenous constitution determines whether the federal or regional government negotiates and enforces international agreements we show that a region s relative aversion to abatement can provide the country with a strategic advantage when the region holds the regulatory powers if the domestic region is sufficiently large and the foreign country s regulatory powers lie with either the federal government or a larger region the country is better off relative to federal jurisdiction this strategic advantage is analogous to that enjoyed by a federal government that can delegate negotiation power therefore domestic political institutions can create the same advantages as the ability to delegate

political influence on non cooperative international climate policy we analyze non cooperative international climate policy in a setting of political competition by national interest groups in the first stage countries decide whether to link their domestic emission permit markets to an international market which only forms if it is supported by all countries in the second stage countries non cooperatively decide on the number of tradable emission allowances in both stages special interest groups try to sway the government in their favor we find that i both the choice of regime and the levels of domestic and global emissions only depend on the aggregate levels of organized stakes in all countries and not on their distribution among individual interest groups and ii an increase in lobbying influence by a particular lobby group may backfire by inducing a change towards the lobby group s less preferred regime

realizing fair outcomes in minimum cost spanning tree problems through non cooperative mechanisms abstract in the context of minimum cost spanning tree problems we present a bargaining mechanism for connecting all agents to the source and dividing the cost among them the basic idea is very simple we ask each agent the part of the cost he is willing to pay for an arc to be constructed we prove that there exists a unique payoff allocation associated with the subgame perfect nash equilibria of this bargaining mechanism moreover this payoff allocation coincides with the rule defined in bergantinos and vidal puga bergantinos g vidal puga j j 2007a a fair rule in minimum cost spanning tree problems journal of economic theory 137 326 352

the politics of 1992 fiscal policy and european integration the internal market in europe will greatly increase the international mobility of resources how will this affect fiscal policy in different countries we consider taxation of capital in a two country model where a democratically chosen government in each country chooses tax policy higher capital mobility changes the politico economic equilibrium in two ways on the one hand it leads to more tax competition between the countries this economic effect tends to lower tax rates in both countries on the other hand it alters voters preferences and makes them elect a different government this political effect offsets the increased tax competition although not completely

cost monotonicity consistency and minimum cost spanning tree games abstract we propose a new cost allocation rule for minimum cost spanning tree games the new rule is a core selection and also satisfies cost monotonicity we also give characterisation theorems for the new rule as well as the much studied bird allocation we show that the principal difference between these two rules is in terms of their consistency properties

informational benefits of international treaties international treaties allow a minister in one country to learn about the beliefs held by a minister in another country so allowing each to make better decisions when the net benefits of environmental policy are uncertain a country which participates in negotiating an environmental treaty or which supports strong environmental action thereby provides information to another country that such action can be worthwhile this dimension of international environmental agreements helps explain why countries negotiate treaties why these treaties often implement the nash non cooperative equilibrium why agreement to a treaty by a country deemed not particularly favorable to it can strengthen environmental action and why treaties may invoke a minimum participation clause the informational mechanism we discuss holds even if physical spillovers are absent and even if monitoring and enforcement are infeasible our approach can explain additional phenomena how requirements for approval by several bodies within a country can increase support for a policy and why simultaneous action can lead to better outcomes than sequential action

international environmental agreements and strategic voting two anonymous referees have provided very valuable comments and suggestions we have also benefited from discussions at seminars at the universities of bonn dortmund and dresden and at the conferences of euresco the european economic association and the verein fur socialpolitik this paper was partly written while haupt was visiting the economics department at the university of colorado at boulder he is very grateful to the members of the department particularly to eckhard janeba for their hospitality and for stimulating discussions and to the fritz thyssen stiftung for funding his research visit we also thank the deutsche forschungsgemeinschaft dfg for financial support

axiomatization of the shapley value on minimum cost spanning tree games abstract this paper axiomatizes the shapley value on minimum cost spanning tree games by using axioms which are different from those used in network games journal of economic literature classification numbers c71 a14

a strategic model of social and economic networks we study the stability and efficiency of social and economic networks when self interested individuals can form or sever links first for two stylized models we characterize the stable and efficient networks there does not always exist a stable network that is efficient next we show that this tension persists generally to assure that there exists a stable network that is efficient one is forced to allocate resources to nodes that are not responsible for any of the production we characterize one such allocation rule the equal split rule and another rule that arises naturally from bargaining of the players

strategic information acquisition and the mitigation of global warming abstract we consider the strategic role of uncertainty and information acquisition for the mitigation of global warming before the countries decide on their contribution to a mitigation of global warming they may invest in information about the country specific benefit of reductions of the emissions of greenhouse gases we show that information acquisition has a substantial strategic value countries may prefer not to learn their benefit of climate protection even if information acquisition does not involve a direct cost this strategic information choice may further decrease the efficiency of the public good provision

economic targets and loss aversion in international environmental cooperation economic targets in environmental coopeartion in the standard emission problem each country s ruling party decides on an optimal level of emissions by analyzing the cost and benefit to the country however such policy decisions are often influenced by political parties incentives to be elected voters tend to give higher priority to economic issues than they do to environmental ones as a result political parties have additional incentives to reach a critical economic benefit level at a cost of higher emission level in order to satisfy voters expectations in economic issues therefore this study explores the implications of political parties being averse to insufficient economic performance relative to a critical economic target level on sustaining an international environmental agreement on emission levels in doing so we allow countries to have asymmetric concerns about economic targets as well as asymmetric technology levels we find that stronger concerns about economic targets deter the most cooperative emission levels countries could jointly sustain furthermore technological asymmetry could either deepen or offset this impact these results suggest that efforts on achieving substantial international environmental agreements should be supported at the citizen level to eliminate the adverse effects

strategic enhancement and destruction of fisheries and the environment in the presence of international externalities abstract this paper considers enhancement of fisheries and the environment in the presence of international externalities by enhancement we refer to investments which affect the costs and benefits of controlling fish harvest rates or pollution emission levels in a two country two period model it is shown that enhancement may be used strategically to influence the behavior of rival governments and that the strategic effect may either offset or reinforce the standard free rider problem associated with such investment in some cases countries may have an incentive to invest in environmental destruction i e negative enhancement if policies are not coordinated internationally

minimum cost arborescences in this paper we analyze the cost allocation problem when a group of agents or nodes have to be connected to a source and where the cost matrix describing the cost of connecting each pair of agents is not necessarily symmetric thus extending the well studied problem of minimum cost spanning tree games where the costs are assumed to be symmetric the focus is on rules which satisfy axioms representing incentive and fairness properties we show that while some results are similar there are also signifcant differences between the frameworks corresponding to symmetric and asymmetric cost matrices