International agreements, economic sovereignty and exit

Martin Richardson and Frank Stähler

European Economic Review, 2019, vol. 120, issue C

Abstract: We develop a model in which realisations of an ex ante uncertain domestic policy environment can make it attractive to a sovereign nation to renege on an international agreement. We show, in a fairly general setting in which the likelihood of exit is affected by the degree of cooperation, that the possibility of exit reduces the optimal degree of initial cooperation. “Full” cooperation will never be optimal, and the optimal degree of cooperation will never be such as to “squeeze out” any possibility of exit. However, an increase in global uncertainty may imply an increase in cooperation when exit risks are already large to begin with.

Keywords: International agreements; International cooperation; Exit; Sovereignty (search for similar items in EconPapers)
JEL-codes: F02 F13 F51 F53 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: International Agreements, Economic Sovereignty and Exit (2018)
Working Paper: International Agreements, Economic Sovereignty and Exit (2017)
Working Paper: International Agreements, Economic Sovereignty and Exit (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:120:y:2019:i:c:s0014292119301862

DOI: 10.1016/j.euroecorev.2019.103326

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