Stable international environmental agreements: an analytical approach

In this paper we examine the formation of international environmen-tal agreements (IEAs). We show that the welfare of the signatories does not increase monotonically with respect to the number of sig-natories. We provide an analytical solution of the leadership model. In particular, we find that if the number of countries is greater than four then there exists a unique stable IEA with either two, three, or four signatories. Furthermore, we show that the welfare of the sig-natories is almost at its lowest level when the IEA is stable. While in our model each country’s choice variable is emissions, we ex-tend our results to the case where the choice variable is abatement efforts. 1