Voluntary Participation in International Environmental Agreements and Authority Structures in a Federation: A Note

We examine how a voluntary participation decision in international environmental negotiations affects the endogenous authority structure in a federation. In our model, the federal government of each country decides whether to delegate both the decision to participate in a negotiation that determines the abatement level of pollution (the level of the public good), and the negotiation itself, to a regional government of the polluter region. We show that there exists a subgame perfect equilibrium in which none of the federal governments chooses delegation, which is quite different from the authority structure in the absence of a voluntary participation decision. The main contribution is to explain why the federal government has an incentive not to delegate decisions to a regional government