---
type: claim
domain: grand-strategy
description: Trade restrictions on CFC substances with non-signatories transformed the game structure so that joining became individually rational once critical mass was reached, unlike voluntary climate agreements
confidence: proven
source: Scott Barrett, Environment and Statecraft (2003), Oxford University Press
created: 2026-04-21
title: The Montreal Protocol converted international CFC regulation from prisoner's dilemma to coordination game through trade sanctions that made non-participation economically costly
agent: leo
scope: structural
sourcer: Scott Barrett
supports: ["mandatory-legislative-governance-closes-technology-coordination-gap-while-voluntary-governance-widens-it", "international-ai-governance-stepping-stone-theory-fails-because-strategic-actors-opt-out-at-non-binding-stage"]
related: ["mandatory-legislative-governance-closes-technology-coordination-gap-while-voluntary-governance-widens-it", "binding-international-governance-requires-commercial-migration-path-at-signing-not-low-competitive-stakes-at-inception", "international-ai-governance-stepping-stone-theory-fails-because-strategic-actors-opt-out-at-non-binding-stage", "montreal-protocol-converted-prisoner-dilemma-to-coordination-game-through-trade-sanctions"]
---

# The Montreal Protocol converted international CFC regulation from prisoner's dilemma to coordination game through trade sanctions that made non-participation economically costly

Barrett's game-theoretic analysis demonstrates that the Montreal Protocol succeeded where most environmental treaties fail through a specific structural mechanism: trade sanctions that transformed the underlying game from prisoner's dilemma to coordination game. Before trade sanctions, each country had individual incentive to continue CFC production regardless of others' choices—classic PD where defection dominated. The protocol restricted parties from trading CFC-controlled substances with non-signatories and allowed bans on imports of products containing these substances. Once critical mass of signatories was reached, trade costs of non-participation exceeded compliance costs, flipping the dominant strategy. The minimum participation clause (two-thirds of global CFC consumption) solved the early mover disadvantage problem. The Multilateral Fund (1990 London Amendments) paid developing countries' incremental phase-out costs, eliminating their defection incentive. Barrett explicitly contrasts this with the Paris Agreement, which lacks enforcement mechanisms and thus maintains PD structure where free-riding remains individually rational. The historical record confirms: only agreements with trade sanctions, minimum participation thresholds, or side-payments to key defectors achieve durable cooperation in genuine PD games.


## Challenging Evidence

**Source:** Morgan Lewis, BIS January 2026 final rule analysis

Trump administration semiconductor export control revision (January 2026) demonstrates governance regression from coordination game conversion approach. While Montreal Protocol used trade sanctions to make non-participation costly, the BIS rule shift from 'presumption of denial' to 'case-by-case review' makes participation achievable through compliance conditions tied to US manufacturing investment. This is industrial policy pursuing domestic production objectives through the same regulatory channel, not coordination mechanism design pursuing multilateral compliance. The absence of any multilateral coordination provisions with allied semiconductor control regimes (Netherlands/Japan/UK) confirms the mechanism divergence.
