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On the core of economies with multilateral environmental externalities
Author(s) -
Stamatopoulos Giorgos
Publication year - 2021
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12479
Subject(s) - core (optical fiber) , stochastic game , externality , negotiation , economics , incentive , construct (python library) , set (abstract data type) , microeconomics , mathematical economics , computer science , political science , telecommunications , programming language , law
We revisit the cooperative model of coalition formation in economies with environmental externalities. Motivated by recent concerns over the true behavior and incentives of key players in international negotiations over the climate and the environment, we construct a cooperative game where the members of each coalition have uncertainty over the behavior of the nonmembers, and in particular they face uncertainty over their coalition structure. As a result, a coalition assigns various probability distributions over the set of partitions the outsiders can form. We compute the payoff of each coalition under this assumption and we derive conditions under which the core of the induced cooperative game is nonempty.