On the Strategic Use of Representative Democracy in International Agreements

We consider as endogenous the choice of the delegation rule in an international agreement between two countries. We study three potential types of delegation: strong, weak or no delegation, the latter case corresponding to direct democracy. We show that populations decide to bind themselves by delegating the national policy decision‐making to a “powerful conservative representative,” in order to improve their bargaining position. These noncooperative behaviors of countries when they decide on their delegation rule induce negative political externalities between countries, which cancel the gains achieved by the internalization of economic externalities in the case of political integration. We then examine the consequences of ratification by referendum. We conclude that a Pareto improvement of the international agreement would be to incorporate an ex post referendum.