Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/176960
Authors: 
Richardson, Martin
Stähler, Frank
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper 6941
Abstract: 
We develop a model in which it is uncertainty about the future domestic policy environment that both makes international cooperation attractive and induces the possibility of a nation reneging on such an international agreement. We show, in a fairly general setting in which the likelihood of exit is affected by the degree of cooperation, that the possibility of exit reduces the optimal degree of initial cooperation. “Full” cooperation will never be optimal, and the optimal degree of cooperation will never be such as to “squeeze out” any possibility of exit. However, an increase in global uncertainty may imply an increase in cooperation when exit risks are already large to begin with.
Subjects: 
international agreements
international cooperation
exit
sovereignty
JEL: 
F02
F13
F51
F53
Document Type: 
Working Paper

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