Conference Agenda

This paper studies the formation of self-enforcing international environmental agreements (IEAs) in the presence of climate tipping points when countries are heterogeneous. Building on Barrett’s (2013) climate-tipping framework, we introduce ex-ante asymmetries in abatement benefits, abatement costs, and climate damages, while incorporating both gradual climate change and irreversible catastrophic losses. The model highlights two distinct coordination problems: coordination between secure and precarious equilibria, and coordination within the secure equilibrium among coalition members and non-members. Adopting a linear–quadratic fixed-loss payoff structure with a deterministic tipping threshold, we formally define three key objects of uncoordinated abatement, abatement tolerance, and additional willingness to abate, which allow for a systematic characterization of equilibrium behavior and coalition stability under asymmetry. We show that asymmetries fundamentally reshape coalition formation by explicitly characterizing the grand coalition stability region. Unlike the symmetric benchmark, asymmetries generate more nuanced stability pattern. The stability of the grand coalition critically depends on coordination between the coalition and the fringe, with Stackelberg leadership representing an extreme but analytically tractable coordination device. Numerical simulations with two-type and fully heterogeneous countries illustrate how asymmetry expands the range of stable coalition structures and, in some cases, allows smaller coalitions to prevent disastrous outcomes when universal participation fails. Overall, the analysis demonstrates that heterogeneity, while complicating coalition patterns, can maintain the effectiveness of self-enforcing climate agreements in the presence of tipping risks.