Charles D. Kolstad

Much of the literature on international environmental agreements (IEA) considers the case of identical countries. There is a much smaller literature concerning the more complex but more realistic case of country heterogeneity. This paper involves modifying the standard static homogeneous country model of international environmental agreements. In particular, we consider two types of countries, differing in size as well as in marginal damage from pollution. Although the IEA does not have a unique size in this case, we do introduce two equilibrium refinements and explore the implications for coalition size. The two refinements include one based on efficiency and one based on equity.