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Bandwagon Effects in International Environmental Agreements

Jonas Werth, Alessia Russo () and Fabio Miessi Sanches
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Jonas Werth: Ca’ Foscari University of Venice; BI Norwegian Business School
Alessia Russo: University of Padua; CEPR
Fabio Miessi Sanches: São Paulo School of Economics

No 2024: 19, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: This paper develops a dynamic model of environmental treaty formation with heterogeneous countries that allows for entry, exit and country specific uncertainty on the benefits from other countries ratifying the treaty. Using a dataset comprising the cross-section of ratification dates of global environmental treaties for 1980-2020, we structurally estimate the model's parameters. The estimates inform about the existence of strategic complementarity or substitutability in the formation of environmental treaties, which occur when the relative benefits from cooperation increase or decrease after the inclusion of an additional country. Through counterfactual experiments, we illustrate how mechanisms fostering strategic complementarity can expedite the establishment of a grand coalition in support of environmental treaties and quantify associated welfare gains.

Keywords: Dynamic Model Estimation; Heterogeneous Countries; International Environmental Agreement; Strategic Complementarity (search for similar items in EconPapers)
JEL-codes: D86 F55 H87 Q54 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2024
New Economics Papers: this item is included in nep-ene, nep-env, nep-gth and nep-int
References: View references in EconPapers View complete reference list from CitEc
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