Handbooks of Research Methods and Applications series
Edited by Matthias Ruth
International environmental problems have played a key role in environmental economics. Best known is probably global warming that affects all countries in the world. The effects may differ however. Most countries are negatively affected by the increased frequency of extreme weather patterns and sea level, though there is strong variation in intensity and consequences. There are also positive aspects in the form of less harsh weather conditions in, for example, Canada and Russia. There are many other types of international problems like the pollution of trans-boundary rivers and acid rain. In contrast to global warming, these problems are local in that they are restricted to a limited set of countries. As is clear from the above, typical for international environmental problem is that the impacts of an externality are not confined to the country of origin. This means that there is no government to enforce a policy aimed at abating the international pollution problem. Hence, any international environmental policy must be voluntary. It is because of these characteristics that non-cooperative game theory enters the stage as a tool to analyze how cooperation can be achieved from self-interested behavior of independent countries (see, for example, Finus 2009; Folmer and von Mouche 2000). Very promising in this context is the so-called ‘new approach’ of coalition formation (see, for instance, Finus and Rundshagen 2009 and references therein). The goal of the new approach is to determine equilibrium coalition structures.
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