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Volkswirtschaft - Open Access LMU - Teil 01/03 Podcast
Ratification quotas in international agreements

Ratification quotas in international agreements

Volkswirtschaft - Open Access LMU - Teil 01/03 vor 20 Jahren

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This paper analyses the role of ratification quotas in multilateral
agreements over emission reduction. The higher is the quota, the
lower is the level of emissions in case the agreement comes into
force, but the higher is also the risk of failure. In a setting
with incomplete information, two country types and a binary
contribution to the provision, I examine the differences between
simultaneous and sequential ratification. When the benefits from
emission of both types are smaller than the social costs, the
outcome in the simultaneous case is essentially identical to the
sequential case. The optimal quota is 100% and achieves the first
best. With the high type's benefits exceeding the social costs, I
find that the optimal quota is as small as possible, if
ratification is simultaneous. In the sequential ratification case,
I cannot determine the optimal quota. However, I find that the
aggregate expected surplus decreases with respect to the
simultaneous case.