Multistage Dynamics of International Environmental Agreements: Free-riding from Membership and Compliance*

In dealing with the multistage dynamics of international environmental agreements (IEAs), it is necessary to analyze the dynamics of global emission level associated with the corresponding abatement process. We model multilateral collaboration among countries as a two-level coalitional game of heterogeneous players with a stepwise emission reduction over a finite and discretized period of time. The formed coalition is assumed to hold a leader's position in the game, and the players that did not join the agreement (free-riders) are assumed to accept a position of the followers.To analyze fulfillment of the emission reduction targets, we construct a time-consistent abatement scheme, which reallocates the players abatement commitments over time. We examine a free-riding problem and introduce a property of time-consistency of the agreement. We show that in some case free-riding incentives of the signatories can be eliminated and internal dynamic stability of the agreement can be maintained.