| Alberto Pinto |
LIAAD INESC TEC, DM, FCUP, Portugal
Portugal |
| Co-Author(s): Elvio Accinelli, Atefeh Afsar, Filipe Martins, Jose Martins, Bruno M.P.M. Oliveira, Luis Quintas |
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| Abstract: |
| The notion of Union is Strength is essential for preserving public goods and mitigating public bads such as air quality. International environmental agreements serve this role by forming stable coalitions, in which agents join or leave based on free-riding incentives. Building on the Baliga-Maskin model, we show that such coalitions can emerge from a simple Markov chain mechanism where agents enter or exit through utility-based bargaining. However, stable coalition formation is challenging, as members may receive substantially lower utility than free-riders. This asymmetry gives rise to Barrett`s paradox of cooperation: even with large coalitions and strong preferences among free-riders, overall utility may remain far below that of the grand coalition. Encouragingly, the paradox of cooperation can be resolved when free-riders have sufficiently low preferences. |
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