Reelection and Renegotiation Electoral considerations may generate starkly differ- this reduces the foreign government's desire to insure ent implications for negotiation outcomes than those itself against future renegotiation.Both of these forces arising when the only relevant consideration is ratifica- encourage the foreign government to make less gener- tion.To illustrate this,consider a country that has a rat- ous concessions.Thus,the key prediction of the ratifica- ification requirement,and suppose that the relatively tion literature- -commonly referred to as the Schelling hostile domestic party holds ratification authority,but Conjecture (Milner 1997)-is entirely reversed in a the friendly party conducts initial negotiations with the context where electoral considerations are paramount. foreign government.This could arise with a divided Static models of intergovernmental negotiations government in which the friendly party holds executive generate predictions about the induced preferences authority,but the hostile party controls the legislative of voters over their representative (e.g.,government upper chamber.If the relatively more hostile party's or legislator)in subsequent negotiations,including preferences regarding international cooperation grow Persson and Tabellini (1992).Besley and Coate(2003) even more hostile-for example,its party leadership Buchholz,Haupt,and Peters (2005),and Harstad becomes more opposed to free trade or international (2008).In our framework,however,negotiations take environmental cooperation-does this benefit or im- place both before and after elections (i.e.,delegation pair the relatively friendly party's ability to extract con- decisions):and both governments'negotiating strate- cessions from the foreign government in its initial ne- gies account for the consequences of today's agree- gotiations? ment for subsequent election outcomes, generating The enduring prediction of the two-level games liter- strategic considerations that are absent in these static ature is that this change in domestic politics raises the models. friendly party's transfers from the foreign government There is a small literature on dynamic negotiations The reason is that the hostile party's increased intrinsic with interim elections.Wolford(2012)assumes that a hostility makes it more prone to refuse ratification.This domestic government is more likely to win reelection encourages the foreign government to make more gen when the share of the surplus it extracts from a for- 4号元 erous concessions to the friendly domestic government eign government in pre-election negotiations rises.We to sway the more hostile ratifier(Schelling 1980). show that when pre-election negotiations determine In our setting,by contrast,the friendly domestic gov the standing offer in subsequent negotiations,and thus ernment and foreign government anticipate the incum- voters'induced preferences,a relatively hostile incum- bent's threat of replacement by the relatively hostile bent suffers a lower prospect of reelection when it se- party in an election.If the hostile party is elected cures greater surplus.In Schultz(2005).an incumbent's the foreign government further anticipates a higher decision to“cooperate'”or“defect'”informs domestic risk that any agreement signed today may be renego- voters about his preferences,informing retention deci- tiated on less favorable terms to the foreign govern sions.However,there is no intergovernmental bargain- ment.More generous initial transfers (1)steer voters ing,and thus no mechanism to distribute any joint gains induced preferences in favor of the friendly govern- from cooperation (e.g.,transfers).In contrast,our fo- ment and(2)insure the foreign government against cus is precisely on how changes in preferences and un- renegotiation by either subsequent domestic govern- certainty affect the distribution of surplus from coop- ment,since more generous standing offers lower the eration across governments.10 Battaglini and Harstad prospect that a future domestic government will prefer (2016)show how an incumbent party might commit to to quit at the standing offer. inefficiently low sanctions (a"weak treaty")to differ- We derive the necessary and sufficient conditions un- entiate itself electorally from a challenger. 8 der which a more hostile opposition party lowers the Smith and Hayes(1997)also study a setting in which foreign government's transfers to the friendly party. countries may renegotiate an inherited pre-election To see why transfers may fall,notice that as the hos- agreement.In their model,governments bargain over tile party grows more extreme,it becomes less elec- spatial policies,rather than transfers as in our set- torally competitive,since more voters prefer the an- ting.They characterize renegotiation outcomes after ticipated negotiating position of the relatively friendly an election for a given inherited status quo and high- party.This has two implications.First,the foreign gov- light some properties that the status quo must satisfy ernment faces less urgency from using more generous if it is derived from pre-election negotiations.How- transfers to steer voters'induced preferences in favor ever,in contrast to our analysis,they do not charac- of reelecting the friendly party.Second,at any level of terize pre-election agreements,conditions on primi- 四 transfers-and thus at any future standing offer-the tives under which pre-election agreements are reached, friendly government is more likely to be reelected,in or how the surplus from agreement is divided across which case the post-election domestic government is governments. more likely to want to maintain any existing agreement; An empirical literature dating back to Thucydides studies the efficacy of internal democracy for foreign over the anticipated bargaining outcomes that their representatives policy commitments(see History of the Peloponnesian will achieve after the election.Once authority is delegated,voters no War. 8.70.1-2.)Recent researchers variously argue that longer influence negotiation outcomes and cannot trigger a reversion to an outside option. 士 9 The intuition is analogous to a Calvert-Wittman framework in 10 In Schneider and Slantchev(2018).governments are privately in which two parties offer differentiated platforms,and one party moves formed about the gains to cooperation,and the division of any sur- its platform further away from the other's. plus from an agreement is exogenous. 1019Reelection and Renegotiation Electoral considerations may generate starkly differ￾ent implications for negotiation outcomes than those arising when the only relevant consideration is ratifica￾tion. To illustrate this, consider a country that has a rat￾ification requirement, and suppose that the relatively hostile domestic party holds ratification authority, but the friendly party conducts initial negotiations with the foreign government. This could arise with a divided government in which the friendly party holds executive authority, but the hostile party controls the legislative upper chamber. If the relatively more hostile party’s preferences regarding international cooperation grow even more hostile—for example, its party leadership becomes more opposed to free trade or international environmental cooperation—does this benefit or im￾pair the relatively friendly party’s ability to extract con￾cessions from the foreign government in its initial ne￾gotiations? The enduring prediction of the two-level games liter￾ature is that this change in domestic politics raises the friendly party’s transfers from the foreign government. The reason is that the hostile party’s increased intrinsic hostility makes it more prone to refuse ratification.This encourages the foreign government to make more gen￾erous concessions to the friendly domestic government to sway the more hostile ratifier (Schelling 1980). In our setting, by contrast, the friendly domestic gov￾ernment and foreign government anticipate the incum￾bent’s threat of replacement by the relatively hostile party in an election. If the hostile party is elected, the foreign government further anticipates a higher risk that any agreement signed today may be renego￾tiated on less favorable terms to the foreign govern￾ment. More generous initial transfers (1) steer voters’ induced preferences in favor of the friendly govern￾ment and (2) insure the foreign government against renegotiation by either subsequent domestic govern￾ment, since more generous standing offers lower the prospect that a future domestic government will prefer to quit at the standing offer. We derive the necessary and sufficient conditions un￾der which a more hostile opposition party lowers the foreign government’s transfers to the friendly party. To see why transfers may fall, notice that as the hos￾tile party grows more extreme, it becomes less elec￾torally competitive, since more voters prefer the an￾ticipated negotiating position of the relatively friendly party.9 This has two implications. First, the foreign gov￾ernment faces less urgency from using more generous transfers to steer voters’ induced preferences in favor of reelecting the friendly party. Second, at any level of transfers—and thus at any future standing offer—the friendly government is more likely to be reelected, in which case the post-election domestic government is more likely to want to maintain any existing agreement; over the anticipated bargaining outcomes that their representatives will achieve after the election. Once authority is delegated, voters no longer influence negotiation outcomes and cannot trigger a reversion to an outside option. 9 The intuition is analogous to a Calvert-Wittman framework in which two parties offer differentiated platforms, and one party moves its platform further away from the other’s. this reduces the foreign government’s desire to insure itself against future renegotiation. Both of these forces encourage the foreign government to make less gener￾ous concessions.Thus, the key prediction of the ratifica￾tion literature—commonly referred to as the Schelling Conjecture (Milner 1997)—is entirely reversed in a context where electoral considerations are paramount. Static models of intergovernmental negotiations generate predictions about the induced preferences of voters over their representative (e.g., government or legislator) in subsequent negotiations, including Persson and Tabellini (1992), Besley and Coate (2003), Buchholz, Haupt, and Peters (2005), and Harstad (2008). In our framework, however, negotiations take place both before and after elections (i.e., delegation decisions); and both governments’ negotiating strate￾gies account for the consequences of today’s agree￾ment for subsequent election outcomes, generating strategic considerations that are absent in these static models. There is a small literature on dynamic negotiations with interim elections. Wolford (2012) assumes that a domestic government is more likely to win reelection when the share of the surplus it extracts from a for￾eign government in pre-election negotiations rises. We show that when pre-election negotiations determine the standing offer in subsequent negotiations, and thus voters’ induced preferences, a relatively hostile incum￾bent suffers a lower prospect of reelection when it se￾cures greater surplus. In Schultz (2005), an incumbent’s decision to “cooperate” or “defect” informs domestic voters about his preferences, informing retention deci￾sions. However, there is no intergovernmental bargain￾ing, and thus no mechanism to distribute any joint gains from cooperation (e.g., transfers). In contrast, our fo￾cus is precisely on how changes in preferences and un￾certainty affect the distribution of surplus from coop￾eration across governments.10 Battaglini and Harstad (2016) show how an incumbent party might commit to inefficiently low sanctions (a “weak treaty”) to differ￾entiate itself electorally from a challenger. Smith and Hayes (1997) also study a setting in which countries may renegotiate an inherited pre-election agreement. In their model, governments bargain over spatial policies, rather than transfers as in our set￾ting. They characterize renegotiation outcomes after an election for a given inherited status quo and high￾light some properties that the status quo must satisfy if it is derived from pre-election negotiations. How￾ever, in contrast to our analysis, they do not charac￾terize pre-election agreements, conditions on primi￾tives under which pre-election agreements are reached, or how the surplus from agreement is divided across governments. An empirical literature dating back to Thucydides studies the efficacy of internal democracy for foreign policy commitments (see History of the Peloponnesian War, 8.70.1-2.) Recent researchers variously argue that 10 In Schneider and Slantchev (2018), governments are privately in￾formed about the gains to cooperation, and the division of any sur￾plus from an agreement is exogenous. 1019 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:04, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000400