Policy interventions under domestic political constraints
Abstract
This paper examines how domestic political constraints influence the outcome of international bargaining. I model a sequential game of incomplete information in which a domestic policymaker, privately informed about their type, proposes a transfer to a foreign government in exchange for a policy concession, while simultaneously threatening sanctions if the concession is rejected. When electorally unconstrained, all types of policymakers fail to make credible offers, and bargaining breaks down entirely—no agreements are reached, and sanctions are imposed. I then show that domestic political constraints, which tie the policymaker’s re-election to the outcome of negotiations, can restore cooperation and achieve Pareto-optimal outcomes. The findings highlight how domestic institutions and policymakers’ self-interest can resolve signaling failures and prevent bargaining breakdowns in international negotiations.
Language
English
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