We augment the standard cartel formation game from non-cooperative coalition theory, often applied in the context of international environmental agreements, with the possibility that singletons support coalition formation without becoming coalition members themselves. We assume their support takes the form of a monetary transfer to the coalition, in order to induce larger coalitions, higher levels of public good provision and higher payoffs. We show that, under mild conditions on the costs and benefits of contributing to the public good (e.g. abatement of greenhouse gas emissions), there exist equilibria with support. Allowing for support increases payoffs to each of three types of agents: members, supporters and free-riders.
# 15-015/VIII (2015-01-27; 2017-07-07)
- Erik Ansink, VU University Amsterdam, the Netherlands; Hans-Peter Weikard, Wageningen University; Cees Withagen, VU University Amsterdam, the Netherlands
- Coalition formation; Public goods; Support; Transfers; International Environmental Agreements
- JEL codes:
- C72, D02, H41, Q54