Dynamic Effects on the Stability of International Environmental Agreements

In terms of the number of signatories, one observes both large and small international environmental agreements. The theoretical literature, based on game theory, discusses different concepts and mechanisms for the stability of coalitions and has reached the conclusion that, under farsightedness, both large and small stable coalitions can occur. In the context of a repeated game, this implies that large stable coalitions can also be sustained over time by a simple trigger mechanism, for large enough discount factors. However, if changes in time implement changes in state, this conclusion does not hold anymore: only small stable coalitions can be sustained.IEA’s, Coalitional stability, Dynamics

Staying Together or Breaking Apart: Policy-Makers’ Endogenous Coalitions Formation in the European Economic and Monetary Union

In this paper, we analyze coordination of macroeconomic stabilization policies within the EMU by focusing, in a dynamic set-up, on asymmetries, externalities, and the existence of a multi-country context. We study how coalitions among fiscal and monetary authorities are formed and what are their effects on the stabilization of output and price. In particular, our attention is directed to study the consequences on these issues of different institutional contexts in which policy-makers may act. Among other results, we found that, in the presence of externalities, the occurrence of asymmetries is a necessary but not a sufficient condition for cooperation.Macroeconomic stabilization, EMU, coalition formation

Cheap Talk, Gullibility, and Welfare in an Environmental Taxation Game

We consider a simple dynamic model of environmental taxation that exhibits time inconsistency. There are two categories of firms, Believers, who take the tax announcements made by the Regulator to face value, and Non-Believers, who perfectly anticipate the Regulator's decisions, albeit at a cost. The proportion of Believers and Non- Believers changes over time depending on the relative profits of both groups. We show that the Regulator can use misleading tax announcements to steer the economy to an equilibrium that is Pareto superior to the solutions usually suggested in the literature. Depending upon the initial proportion of Believers, the Regulator may prefer a fast or a low speed of reaction of the firms to differences in Believers/Non-Believers profits.Environmental policy, Emissions taxes, Time inconsistency, Heterogeneous agents, Bounded rationality, Learning, Multiple equilibria, Stackelberg games

Social Conformity and Bounded Rationality in Arbitrary Games with Incomplete Information: Some First Results

In has been frequently observed, in both economics and psychology, that individuals tend to conform to the choices of other individuals with whom thy identify. Can such conformity be consistent with self-interested behaviour? To address this question we use the framework of games with incomplete information. For a given game we first put a lower bound on e so that there exists a Nash e-equilibrium in pure strategies consistent with conformity. We also introduce a new concept of conformity that allows players to conform and yet perform different actions. This is achieved by the endogenous assignment of roles to players and by allowing actions to be conditional on roles. We conclude by relating our research to some experimental literature.Social Conformity, Bounded Rationality, Arbitrary Games

Collusion Inducing Taxation of a Polluting Oligopoly

We show that an environmental regulation such as a tax on pollution can act as a collusive device and induce stable cartelization in an oligopolistic polluting industry. We consider a dynamic game where pollution is allowed to accumulate into a stock over time and a cartel that includes all the firms in the industry. We show that a tax on pollution emissions can make it unprofitable for any firm to leave the cartel. Moreover the cartel formation can diminish the welfare gain from environmental regulation. We provide an example where social welfare under environmental regulation and collusion of firms is below social welfare under a laisser-faire policy.pollution tax;oligopoly;cartel formation;coalition formation;differential game

Stable Matchings for a Generalised Marriage Problem

We show that a simple generalisation of the Deferred Acceptance Procedure with men proposing due to Gale and Shapley (1962) yields outcomes for a generalised marriage problem, which are necessarily stable. We also show that any outcome of this procedure is Weakly Pareto Optimal for Men, i.e. there is no other outcome which all men prefer to an outcome of this procedure. In a final concluding section of this paper, we consider the problem of choosing a set of multi-party contracts, where each coalition of agents has a non-empty finite set of feasible contracts to choose from. We call such problems, generalised contract choice problems. The model we propose is a generalisation of the model due to Shapley and Scarf (1974) called the housing market. We are able to show with the help of a three agent example, that there exists a generalised contract choice problem, which does not admit any stable outcome.Stable outcomes, Matchings, pay-offs, Generalised marriage problem, Contract choice problem

The Role of the City in Fostering Intergroup Communication in a Multicultural Environment: Saint-Petersburg’s Case

In this paper two aspects of the issue will be discussed. First, there is the role of authorities, NGOs in forming the multicultural environment in the city with cultural diversity. Second, the city as social context, the images and myths of the city determine discourse on multiculturalism and influence the cross-cultural communication in the city. After describing historically shaped images of the city, employment of city’s myths and symbols in discourse and policy of multiculturalism, and role of city’s institutions in fostering inter-group communication, this paper will discuss the inclusive culture of the city, shaped by the networking interaction, which blurs the distinction between «insiders» and «outsiders». Here the trends of (post)modern inter/trans-national relations will be extrapolated on the trans-cultural interaction in the multicultural city, taking into consideration that network interactions build up not between the territories, but in the space, where logic of borders overcomes.Multicultural, Identity, Image, Myth, Discourse, We-groups, Inclusive networks, Inclusive culture, Transnational interaction, Transnational civil society

Free Trade Networks

The paper examines the formation of free trade agreements (FTAs) as a network formation game. We consider a general n-country model in which countries trade differentiated industrial commodities as well as a numeraire good. Countries may be different in the size of the industrial good industry (measure of firms) and the market size (population size). Their incentives to sign an FTA depend on these characteristics of their own countries and those of their partner countries. We show that if all countries are symmetric, a complete global free trade network is pairwise stable and it is the unique stable network if industrial commodities are not highly substitutable. We also compare FTAs and customs unions (CUs) as to which of these two regimes facilitate global trade liberalization, emphasizing the fact that unlike in the case of a CU, each country signing an FTA can have a new FTA with an outside country without consent of other member countries.Free trade agreement, Customs union, Global free trade, Theory of network, Pairwise stability

Monetary Value Assessment of Clam Fishing Management Practices in the Venice Lagoon: Results from a Stated Choice Exercise

This article focuses on the economic valuation of alternative clam management practices in the Venice Lagoon. The proposed valuation method is characterized by the design of a survey questionnaire next to the fishermen population. In each questionnaire two fishing alternatives are described. The respondent is asked to choose one of them. This valuation method, referred in the article as conjoint valuation, gives sufficient flexibility to set, alter, and combine different management practices. Furthermore, this approach presents an important advantage to the well-known contingent valuation method since it makes the monetary valuation of each management attribute possible. Estimation results of the random utility model show that fishermen’s willingness to pay for a larger clam fishing area is approximately 568 € per year. In addition, an individual fisherman would be willing to pay 1,005 € for a change from today’s fishing situation practice towards a fishing practice exclusively based on vibrant rake system. If we take into account the interaction between fishing management attributes and fishermen characteristics, we can see that the valuation of each management practice differs substantially across the two populations. We can observe that the population of fishermen that operate in the cooperative regime presents not only a higher monetary valuation for an increase in the dimension of the fishing concession, which is now valued at 811 €, but also a stronger willingness to pay for a change from today’s fishing situation towards a fishing practice exclusively based on vibrant rake system, which is now estimated at 2,456 €. Finally, the adoption of a clam fish management practice in Venice Lagoon that is exclusively based on the use of manual rakes, which is associated to the lowest damage to the Lagoon ecosystem, will represent a welfare loss of 5,904 € per fisherman per year. Combining this value with the total number of fishermen currently operating in the Lagoon of Venice, the welfare loss associated with the adoption of such clam management policy that is exclusively based on the use of manual rakes amounts to 11.8 € million per year. This figure can be regarded as an upper bound to the cost of implementation of a clam fishing system anchored in the use of manual, ecosystem friendly rakes.Exotic marine species, Fishing rakes, Manila clam, Fishing effort, Open access, Welfare damages, Policy guidance, Permit price

Communication Across Cultures: From Cultural Awareness to Reconciliation of the Dilemmas

In this globalising world there is a growing need for understanding different types and forms of interaction between people in intercultural environments, i.e. working places, cities, etc. This implies that people refer more and more to various communication models and practices to fully master communication across cultures. These models ultimately lead to applying best practices in intercultural communication. One of the most popular models in the one developed by Trompenaars & Hampden-Turner. In this paper we first review the concept of culture related to this model. Second, we present the 7 dimensions of the model. Finally, we review the reconciliation theory as presented by Hampden-Turner & Trompenaars.Intercultural communication, Reconciliation model, Dilemmas, Intercultural context