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International agreements, economic sovereignty and exit

Author

Listed:
  • Richardson, Martin
  • Stähler, Frank
Abstract
We develop a model in which realisations of an ex ante uncertain domestic policy environment can make it attractive to a sovereign nation to renege on 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.

Suggested Citation

  • Richardson, Martin & Stähler, Frank, 2019. "International agreements, economic sovereignty and exit," European Economic Review, Elsevier, vol. 120(C).
    • Handle: RePEc:eee:eecrev:v:120:y:2019:i:c:s0014292119301862
    DOI: 10.1016/j.euroecorev.2019.103326
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    Cited by:

    1. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2019. "Foreign Influence and Domestic Policy: A Survey," Working Papers 1072, Barcelona School of Economics.
    2. Guttorm Schjelderup & Frank Stähler, 2021. "Investor‐state dispute settlement and multinational firm behavior," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1013-1024, September.
    3. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    4. Christoph March & Ina Schieferdecker, 2021. "Technological Sovereignty as Ability, Not Autarky," CESifo Working Paper Series 9139, CESifo.

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    More about this item

    Keywords

    International agreements; International cooperation; Exit; Sovereignty;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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