Non-cooperative game theoretical models of International Environmental Agreements (lEAs) use the assumption that coalition of signatories maximizes their joint welfare. In this paper, the joint maximization assumption is compared to different welfare sharing schemes such as Shapley value, Nash bargaining solution and consensus value. The results show that the joint welfare maximization assumption is similar to the Nash bargaining solution.

The formation and implementation of International Environmental Agreements (IEAs) is the topic of a broad economic literature. A significant part of the literature uses game theory as a tool to understand the formation mechanism of lEAs. There are two main directions of literature on lEAs (for a review of current literature, see Carraro and Siniscalco, 1998; Ioannidis et al., 2000; Finus, 2003; and Carraro et al., 2005). The first direction utilizes the concepts of cooperative game theory in order to model the formation of IEAs. This is a rather optimistic view and it shows that an IEA signed by all countries is stable, provided that utility is transferable and side payments are adequate (Chander and Tulkens, 1995, 1997 and 2006). The second direction uses the concepts of non-cooperative game theory to model the formation of lEAs (Barrett, 1994; Osmani and Tol, 2006; and Rubio and Ulph, 2006). At the first level, the link between the economic activity and the physical environment is established in order to generate the economical-ecological model. This link is established through a social welfare function. The social welfare function captures the difference between the profit from pollution and environmental damage.

The Climate Framework for Uncertainty, Negotiation and Distribution (FUND) model provides the social welfare functions in our model.Following this approach, countries play a two-stage game. In the first stage, each country decides to join the IEA, or to stay as a non-member. In the second stage, every country decides on emissions. The main body of literature examining the formation of IEA within a two-stage framework uses a certain set of assumptions.

A Short Note on Joint Welfare Maximization Assumption, International Environmental Agreements (lEAs), welfare sharing schemes, bargaining solution, economic literature, cooperative game theory, economic activity, economical-ecological model, Negotiation and Distribution (FUND) model.