Negotiating environmental agreements: Regional or federal authority?

This paper examines the possible strategic advantage enjoyed by a country when its regional governments negotiate international environmental agreements rather than the federal government. A model in which two countries negotiate an international agreement on the abatement of a shared pollutant is developed. Each countryʹs exogenous constitution determines whether the federal or regional government negotiates and enforces international agreements. We show that a regionʹs relative aversion to abatement can provide the country with a strategic advantage when the region holds the regulatory powers. If the domestic region is sufficiently large and the foreign countryʹs regulatory powers lie with either the federal government or a larger region, the country is better off relative to federal jurisdiction. This strategic advantage is analogous to that enjoyed by a federal government that can delegate negotiation power. Therefore, domestic political institutions can create the same advantages as the ability to delegate.