FEEM working papers "Note di lavoro" series
2003 .040

Endogenous Strategic Issue Linkage in International Negotiations


Authors: Carlo Carraro, Carmen Marchiori
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Book
Keywords: International environmental agreements,coalition formation games,issue linkage
JEL: Game Practice and the Environment
Published in: Edward Elgar
Date: 2004

Abstract

This paper analyses issue linkage as a way to increase co-operation on issues where incentives to free-ride are strong. The goal is to determine under what conditions players prefer to link negotiations on two different issues rather than to negotiate on the two issues separately. Suppose that players are asked to vote on issue linkage before starting negotiations. Under what conditions would they vote in favour of issue linkage? The answer to this question is not trivial. Issue linkage may indeed increase the number of cooperators on the provision of a public good (a typical issue characterised by strong incentives to free-ride). However, at the same time, issue linkage may reduce the number of cooperating players on the other economic issue which is linked to the provision of a public good. Players therefore face a trade-off. This paper analyses this trade-off within a game-theoretic framework and shows under what conditions issue linkage is players' equilibrium strategy.
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