Introducing “Cooperative Push”: How Inefficient Environmental Policy (Sometimes!) Protects the Global Commons Better

In this paper we argue that the incentive structures of the gamesnations play in international environmental negotiations dependupon the choice of environmental policy instruments. Bargainingon the use of some instrument (e.g. an effluent charge) mayput the players into a dilemma game (like Chicken). Negotiationsto apply a different instrument (say, an emission reductionquota) may lead to a cooperation game (like Stag Hunt). The higherthe incentive to cooperate in the type of game which is built upby a specific instrument, the higher is this instrument's``cooperative push''. Of course, comparing two instruments,the one with the higher cooperative push might well be the lessefficient one. In this Paper, we analyse a situation where thehigher cooperative push of an instrument overcompensates thisinstrument's lower efficiency: Aggregate welfare withbilateral cooperation (the equilibrium of Stag Hunt) is higher than withunilateral cooperation (the equilibrium of the Chicken game).The question remains whether sovereign countries decide to playStag Hunt ending up in the welfare superior equilibrium. It isshown below that they do not in an uncoordinated optimising setting.However, we develop a particular frame where the proposedsolution meets the criteria of individual rationality,stability and fairness. It thereby establishes the politically mostdesired result – international cooperation.