Transboundary pollution constitutes an important component of environmental degradation in many countries. The demand for institutional changes that reduce transboundaiy pollution grows with increasing levels of economic development and accumulation of environmental degradatioo. Single countries, however, can set up such institutions only in cooperation with other countries. This paper analy7.CS the strategic game theoretic situation of countries ccncemed with transboundary polhnion under alternative benefit-<:<>st situations. The results suggest that a system of reciprocal obligations of countries can result in supranational agreements if the assurance problem of each signatory can be solved and the distribution of costs and benefits of such agreements are perceived as being fair.


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