‘Climate Coalitions with Sophisticated Policy Makers', joint with Maria Arvaniti and Rick van der Ploeg , CEPR Discussion pPper , Revised-&-Resubmitted to Journal of Public Economics, 2025
Abstract: We study the formation of international climate coalitions with sophisticated policy makers. They strategically predict the consequences of their membership decisions in climate negotiations and use an integrated assessment model of the economy and the climate in their decision making. We analytically characterise the equilibrium number of coalitions and their number of signatories with certain types of heterogeneity. The special structure of our model drastically reduces the computational complexity of coalition formation with heterogeneous countries. We also investigate numerically possible coalition outcomes for a calibrated model with an exhaustible and inexhaustible energy sector. In contrast to earlier approaches to coalition formation based on internal and external stability, much larger coalitions can be sustained in equilibrium alongside smaller ones. Sophisticated policy makers thus give rise to more mitigation of global warming.
'From Free Riding under Uncertainty to Designing Efficient Coalitions' , 2025
Abstract: This paper examines coalition formation for the provision of a public good under uncertainty. Uncertainty concerns the marginal benefit of the public good, and a common belief about it shapes both contributions and coalition membership. In making membership decisions, the players are strategic and anticipate the entire coalition structure. We characterize the equilibrium coalition structure as a function of beliefs, with a unique number of free riders at any belief. Inefficiency is most severe under pessimistic beliefs where the upper bound on welfare losses is attained. Approaching the problem from an information design perspective, we suggest an information sender who designs and publicly discloses signals can steer membership choices and minimize free riding. Our main result establishes that, with sufficient ex-ante uncertainty, for any number of players the sender can implement coalition structures with a minimum number of free riders.
Abstract: This paper develops a framework to examine the role of public information in dynamic self-enforcing International Environmental Agreements (IEAs) on climate change, where the countries interact either in implicit or in coalitional agreements. In a stochastic model, where the social cost of Greenhouse Gasses (GHG) is an unknown random variable, an information sender, such as the Intergovernmental Panel on Climate Change (IPCC), can control the release of verifiable information about the unknown state variable to the countries. We show that the communication of information can lead to an increase in the emission abatement levels of the countries, even that of the free riders of a climate coalition, and potentially increases size of the climate coalition. We derive the equilibrium learning outcome of both dynamic games. Among all cases, in only one clearly defined case the sender and the society as a whole benefit from withholding information. However, this case vanishes as the sender gets perfectly informed about the underlying social cost.
Panic-Based Overfishing In Transboundary Fisheries- Environmental and Resource Economics , 2019
Abstract: This paper analyses sustainability of bilateral harvesting agreements in transboundary fisheries. Harvesting countries obtain public and private assessments regarding their stock of fish, and the stock experiences ecological changes. In addition to biological uncertainty, countries may face strategic uncertainty. A country that receives negative assessments about the current level of fish stock, may become 'pessimistic' about the assessment of the other coastal state, and this can ignite 'panic-based' overfishing. The paper examines the likelihood of overfishing and suggests a unique prediction about the possibility of abiding by bilateral fishing agreements. Conditions under which the outcome of the asymmetric-information model reduces to the symmetric-information game are discussed, and optimal policy instruments for intergovernmental management of the stock are offered.
'From Domestic Pressure to Linking Climate Coalitions', 2025
'Optimal benevolence of North to South on Green Technologies, If Any', joint with Carles Mano-Cabello and Rick van der Ploeg, 2025
‘Optimal Design of Climate Negotiations’
'Conservation and Pandemics’