Tuesday, July 24, 2007

Symposium on Public International Law and Economics: Still More Papers

More papers from the Symposium "Public International Law and Economics," forthcoming in the University of Illinois Law Review, have been posted. (For papers previously posted see here, here, and here.) These include:

Todd Sandler (Univ. of Texas, Dallas - Economics & Finance), Treaties: Strategic Considerations. Here's the abstract:

This paper presents a rationalist approach to treaty formation and adherence, where nations are motivated by their self-interest in a strategic framework that accounts for other nations' responses. Key considerations include coordination games, dynamic cooperation, institutional design, and the aggregation technology of public supply. Dynamic aspects involve multilateral cooperation under a variety of game forms. Treaty design is essential in motivating nations to fulfill obligations without the need for enforcement. Some properties of public goods - e.g., the manner in which individual contributions determine the available consumption level (i.e., the aggregation technology) - have a crucial influence over nations' incentives to adhere to treaties once ratified. The role of morality and conformity are captured in the strategic framework presented.

The analysis of this paper extends the interesting work of Goldsmith and Posner which have rejected the standard "explanations of customary international law (CIL) based on opinio juris, legality, morality, and related concepts." They have, instead, taken a positivist, rationalist viewpoint of CIL in which unitary actors, representing countries, are driven by self-interests and strategic considerations. Goldsmith and Posner's study accounts for game-theoretical interactions among states, whereby an agent adjusts for how its counterparts will react to the agent's actions. Carrying on in this tradition, the current paper indicates that treaties can be designed to be self-enforcing depending on the incentives captured by the treaty wording. The presence of strategic players need not lead to a pessimistic result For example, the Montreal Protocol on Ozone Depleting Substances resulted in a treaty where adherence has been excellent and there has been little need for enforcement at the country level. Throughout the paper, we present a host of different games that include two and many players, single and repeated plays, and a host of game forms. In particular, we do not just focus on the Prisoner's Dilemma.

Simon Evenett (University of St. Gallen - Economics), What Can Be Learned from the Game-Theoretic Analyses of Treaties? A Comment on Professor Sandler's Contribution. Here's the abstract:

In recent years a number of prominent legal scholars have joined a longer-standing tradition among economists in analysing treaties using a positivist and rationalist approach, often invoking game theoretic tools. This paper seeks to assess the boundaries of this research programme, identifying not only questions that this scholarship seeks to answer, but also those it overlooks. It is argued that some of the latter could profitably be examined using the same methodology and a number of suggestions are made in this respect. Perhaps more critically it is argued that certain key features of treaties, such as their very codification in the first place, cannot be explained by appeals to standard models of repeated games and that further refinements are necessary. It is hoped that this note will be of interest to consumers and as well as producers of the literature on treaties and other codified international agreements.

Katharina Holzinger (Univ. of Hamburg), Treaty Formation and Strategic Constellations. An Extension of Sandler. Here's the abstract:
In his article on "Treaties: Strategic Considerations" Todd Sandler analyses the conditions facilitating or impeding international cooperation. These conditions are determined by the strategic constellation of potential signatories of treaties. The strategic constellation, in turn, depends on a whole range of properties of the situation in question. Sandler shows the effects of some variation with respect to these properties, but does not treat them systematically. As an extension to Sandler I deal with a number of such properties more explicitly. I chose four basic properties which play a role in almost any situation of international treaty formation: (1) costs and benefits of the pursued public good for the interested countries, (2) demand-side properties of the public goods, (3) supply side properties, i.e. their aggregation technology, and (4) the homo- and heterogeneity of the concerned countries. The paper shows some systematic effects of the variation of such properties.
Beth Simmons (Harvard - Government), Zachary Elkins (Univ. of Illinois - Political Science), & Andrew Guzman (Univ. of California, Berkeley - Law), Competing for Capital: The Diffusion of Bilateral Investment Treaties, 1960-2000. Here's the abstract:
Over the past forty-five years, bilateral investment treaties (BITs) have become the most important international legal mechanism for the encouragement and governance of foreign direct investment. Their proliferation over the past two decades in particular has been phenomenal. These intergovernmental treaties typically grant extensive rights to foreign investors, including protection of contractual rights and the right to international arbitration in the event of an investment dispute. How can we explain the diffusion of BITs? We argue that the spread of BITs is driven by international competition among potential host countries - typically developing countries - for foreign direct investment. We design and test three different measures of economic competition. We also look for indirect evidence of competitive pressures on the host to sign BITs. The evidence suggests that potential hosts are more likely to sign BITs when their competitors have done so. We find some evidence that coercion and learning play a role, but less support for cultural explanations based on emulation. Our main finding is that diffusion in this case is associated with competitive economic pressures among developing countries to capture a share of foreign investment. We are agnostic at this point about the benefits of this competition for development.