When cooperation is not voluntarily forthcoming, positive incentives are the best way to achieve sustained inter-governmental cooperation. GATT Secretariat, “Trade and the Environment, ” (1992: 36)
I have assumed thus far that countries are symmetric when they obviously differ widely. Some countries are affected more (in absolute or relative terms) by an environmental problem than are others, and some degrade the shared environment by more than do others. These asymmetries often dominate negotiations and they sometimes seem to be the main obstacle to a successful outcome. In this chapter I shall show that asymmetries are important, but that they are not an insurmountable barrier to successful cooperation. To the contrary, they may make cooperation easier.
I have also assumed thus far that cooperation can only be sustained by the credible threat to punish free-riders. To many this will seem too negative a perspective. Carrots can be, and sometimes are, used in place of, or along with, sticks. Would not it be better, as the GATT Secretariat suggests, to construct positive incentives for participation in an international treaty?
In this chapter, I relax these assumptions. I shall show that carrots can promote cooperation—but only if countries are sufficiently asymmetric. I shall also show that carrots only help if coupled with the use of effective sticks. As the lawyer-economist Howard Chang (1995) has argued, the “carrots only” approach advocated by the GATT Secretariat is unable to resolve a transnational PD.
What exactly is a “carrot”? It is sometimes thought of as the obverse of a stick. Consider the analysis in Chapter 7 . Suppose that an agreement consists of k* parties. If one party withdrew from such a treaty, all the others would punish the deviant by playing Pollute instead of Abate. 1 This is a stick. Now suppose that there were k* − 1 parties. Then, if one country acceded, the other parties would reward this country by playing Abate. This might be called a carrot. When looked at in this way, sticks and carrots are different sides of the same coin.
This is not how the term is used here. In this chapter, a carrot is a new instrument, introduced by enlarging the strategy space (just as trade sanctions were introduced