type="main" <p>We investigate how different designs of carbon offset mechanisms, like the Kyoto Protocol's Clean Development Mechanism (CDM), affect the success of self-enforcing climate treaties. In a game-theoretic numerical model of coalition formation we find that participation in the agreement...</p>

This paper presents a model of international environmental agreements in which cooperation between asymmetric countries can arise through pure self-interest. It demonstrates how emissions trading creates economic surplus by exploiting asymmetries. This surplus can be distributed via the...