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the Clean Development Mechanism may be seen as an example.) Issue Linkage Another possibility to enlarge coalitions at the equilibrium is to couple the negotiations on the global public good with negotiations on other issues. Such issue linkage was introduced in the economic literature on international environmental cooperation to solve the problem of asymmetries among coun- tries. In this case, issue linkage works very much like transfers among asymmetric players. Another reason why issue linkage has been advocated is that it has the potential to reduce free- riding incentives, especially when the linked negotiation con- cerns club or quasiclub goods. The idea is to introduce forces that work against the free-riding incentive induced by the negotiation over the public good. The literature has mostly concentrated on linking environmental negotiations with ne- gotiations on trade liberalization and with agreements on technological cooperation. It has been shown that, in general, issue linkage does in- crease the degree of cooperation among countries and leads to coalition structures that generate higher global welfare. How- ever, the optimal number of issues that countries should tie together in the negotiation process is unclear. There is indeed a trade-off between wider participation to the environmental agreement and participation on the issue that is linked to nego- tiations. For example, some countries, for which the participation in the environmental agreement is particularly expensive, might not receive high enough benefits from the access to the club good, and would, consequently, choose a noncooperative behavior with respect to both issues. This may happen also if, in principle, they would have accepted to join an agreement on the club good. In these cases, the enlargement of the coalition comes at the cost of having a smaller number of countries participating to the second agreement. There is a literature exploring this trade-off by modeling a three-stage noncooperative sequential game in which players bargain over the number of issues to link in the negotiation in a first stage in which the rules of the bargaining process are chosen. The key question is whether players have an incentive to link the negotiations to two different issues instead of ne- gotiating on the two issues separately? This can be analyzed by assuming that countries can negotiate over two issues either jointly or separately. The first negotiation concerns the provi- sion of a global public good, while the second issue regards a club or semiclub good. A necessary condition to link Climate Change and Policy | International Climate Treaties and Coalition Building 61 negotiations is that the players who start cooperating over the provision of the public good have large enough benefits from the cooperation. A necessary and sufficient condition is instead that the welfare gain induced by greater cooperation on the public good is large enough to compensate the welfare loss from a smaller coalition on the club good induced by the choice of issue linkage. Two elements from this literature are of particular interest from a policy perspective: (1) the way in which participation in the two agreements changes when they are linked and (2) the way in which welfare changes when coalition size changes as a result of linkage. The larger the increased benefits induced by a larger cooperation on the public good issue, the larger the likelihood that issue linkage be adopted. Similarly, the smal- ler the loss from reduced cooperation on the club good agree- ment, the larger the likelihood that issue linkage is adopted. The ultimate impact on welfare, and thus on the desirability of linkage, emerges as the outcome of these two combined effects. Conclusions The main conclusions that can be drawn from the literature considered in this article can be summarized as follows: 1. The presence of asymmetries across countries and the incentive to free-ride make the existence of global self- enforcing agreements, that is, agreements that are profitable to all countries and stable, quite unlikely. 2. When self-enforcing international environmental agree- ments exist, they are signed by a limited number of countries. 3. The grand coalition, in which all countries sign the same environmental agreement, is unlikely to be an equilibrium. 4. The equilibrium coalition structure is not formed by a single coalition (a single group of signatories). In general, more than one coalition forms at the equilibrium. 5. Coalitions of different sizes may emerge at the equilibrium, even when countries are symmetric. 6. An appropriate transfer scheme or an issue linkage mecha- nism can be used to give rise to larger coalitions. The lesson that can be drawn from these results can be phrased as follows. A global agreement is unlikely to be signed by all the relevant countries. Several parallel agreements are going to emerge over time. Domestic measures and/or policies imple- mented by small groups of countries are going to be adopted to protect the environment. There are several directions of further research that deserve additional efforts. The strategic dimension of environmental negotiations, at both the international and domestic levels (voters may be asked to ratify an environmental agreement), leads to interesting political economy problems. The lack of a supranational authority calls for an analysis of new interna- tional institutions. The possibility of expanding coalitions by linking environmental and trade negotiations requires further theoretical and empirical analyses. A dynamic framework may be more appropriate to deal with environmental issues in which the stock of pollutants, rather than the flow (emissions), is the crucial variable to monitor. The analysis of the impact of transfers and issue linkage on the size of stable coalitions should be extended to the theoretical approach in which mul- tiple coalitions are allowed, and to the one in which the membership rules are endogenous. Finally, it is important to test theory results using more advanced energy\u2013economy\u2013 environment models that capture the many asymmetries among players, realistic abatement cost functions, and linkages with nonenvironmental issues such as trade. See also: Political Economy: Political Economy of International Environmental Agreements; Strategic Environmental Policy. Further Reading Barrett S (1994) Self-enforcing international environmental agreements. Oxford Economic Papers, No. 46. Barrett S (2001) International cooperation for sale. European Economic Review 45(10): 1835\u20131850. Barrett S (2003) Environment and Statecraft. Oxford: Oxford University Press. Bosetti V, Carraro C, Decian E, Massetti E, and Tavoni M (2012) Incentives and stability of international climate coalitions: An integrated assessment. Energy Policy, forthcoming. Botteon M and Carraro C (1997) Burden-sharing and coalition stability in environmental negotiations with asymmetric countries. In: Carraro C (ed.) International Environmental Agreements: Strategic Policy Issues. Cheltenham: Edward Elgar. Buchner B, Carraro C, Cersosimo I, and Marchiori C (2002) Back to Kyoto? US participation and the linkage between R&D and climate cooperation. FEEM Nota di Lavoro No. 22.02 Carraro C (1997) International Environmental Agreements: Strategic Policy Issues. Cheltenham: Edward Elgar. Carraro C (ed.) (2003) The Endogenous Formation of Economic Coalitions. Cheltenham: Edward Elgar. Carraro C, Eyckmans J, and Finus M (2006) Optimal transfers and participation decisions in international environmental agreements. The Review of International Organizations 1(4): 379\u2013396.