New Horizons in Environmental Economics series
Chapter 15: Coalition Models: A Third Approach
INTRODUCTION A drawback of the coalition models discussed in the previous chapters is that they exogenously assume that there is a group of players which cooperate (signatories) and a second group of players which play as singletons (non-signatories). However, a priori, it is not clear whether equilibria in which several coalitions coexist can be excluded. Suppose such equilibria actually exist. Then the assumption of the previous models that an equilibrium coalition must only be immune to deviations by a single country may no longer be adequate. Then, a coalition structure should only be called an equilibrium if it is not challenged by any kind of deviation, regardless of whether a single country or a sub-group of countries deviates. The aim of this chapter is to discuss some recent developments in the game theoretical literature on the formation of coalitions which allow for the coexistence of several coalitions. Most of these concepts have not yet been applied to the problem of international pollution control. Of those which have been applied to similar problems, only very general results have been derived, making it diﬃcult to draw sound conclusions of practical relevance.1 The subsequent discussion therefore pays particular attention to introducing the reader to the idea of these concepts and to evaluate them with respect to a possible application in future research. A simple example will illustrate the basic ideas of these concepts. All subsequent concepts belong to the realm of non-cooperative game theory, though some of them have been developed from...
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