- The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development
Edited by Carlo Carraro
Carlo Carraro and Carmen Marchiori 1. INTRODUCTION Coalitions are a widespread phenomenon in old and modern societies. Households can be seen as coalitions, as well as nations or research joint ventures. In industrial economics, cartels have been interpreted as coalitions, whereas in environmental economics, agreements among several nations to protect the international environment have also been described as coalitions. In recent years, the problem of global public goods, such as the international environment, but also peace or crime control, has become increasingly important. Transnational externalities, being related to knowledge, information, migrations, pollution, crime and similar ﬂows, play a major role in international politics. Their importance and close link to economic development may aﬀect growth and welfare at a macroeconomic level. Hence the need for global policies to correct their undesired eﬀects. In the present institutional setting – with no supranational governing bodies – global externalities cannot be corrected by global institutions, which do not exist, but need to be corrected by voluntary agreements among sovereign states and/or by voluntary initiatives undertaken by ﬁrms, industries, households, NGOs and so on. This situation requires international cooperation among nations and/or agents. To analyse the emergence of international cooperation, economists have used a fairly new game-theoretic approach, in which cooperation is the outcome of a non-cooperative strategic behaviour of the players involved in the negotiations. This approach has been proposed both in games without spillovers (Le Breton and Weber, 1993; Konishi, Le Breton and Weber, 1997) and in games with positive or negative spillovers...
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