International environmental agreements with the formation of multiple coalitions

This paper examines the formation of multiple coalitions under the umbrella of an international environmental agreement. Using a repeated game, we demonstrate that in any coalition structure consisting of only two or three countries, cooperation can be sustained through punishments inflicted on the deviating country from agreement rules by fellow coalition members if the discount factor is greater than 1/2. Furthermore, our rules of agreement can be effective even in the case of heterogeneous countries if coalitions are formed among the same type of countries. With this method, a coalition consisting of two or three countries is sustained whenever the discount factor is greater than 1/2, as is the case with symmetric countries.