International Environmental Cooperation under Fairness and Reciprocity

Abstract

This paper explores the implications of fairness and reciprocity for self-enforcing international environmental agreements on pollution abatement. Reciprocal countries reward fair behavior (positive reciprocity), but retaliate against countries behaving unfairly (negative reciprocity). We demonstrate that reciprocal countries that have moderate expectations from each other with respect to their national abatement strategies can support a greater degree of environmental cooperation than self-interested ones. However, when only very high abatement standards are deemed fair, then reciprocity could have a detrimental effect on international environmental cooperation. Our model therefore provides a novel perspective on the role of expectations in environmental negotiations.