Safety, Incomplete Contract With International Rules

This thesis aims to explore the way of solving dispute on East China Sea between China and Japan within a macro viewpoint. We do not fall ourselves into the fussy details of the negotiations but begin our analysis with the countries or nations'preference on aims, their activity rules and the common international laws and rules they are facing. Countries or nations are assumed to act strategically under the limits of international laws and rules to achieve their aims. So the internal characteristic and external constraints of countries or nations are key factors for the thesis.We argue that a country can only achieve two of the whole three goals which are efficiency, equality and security at the same time. Then we study the situations of China by empirical analysis and Japan by theoretical analysis. We find that security and equality are relatively emphasized in traditional China while security and efficiency are more important for Japanese.We also study the nature and the evolution of international maritime laws. Along with the development of technology, free taking from ocean will lead to"The Tragedy of the Commons". Countries negotiate for a long time and succeed to form a constructively ambiguous system of laws and rules. But it is an incomplete system since it includes conflicting interests endogenously. As a result, the possible contract between China and Japan will be another incomplete contract as a complement to the incomplete The United Nations Convention on the Law of the Sea.Then we analyze the dispute between China and Japan on the point of incomplete contract theory. Take account of the goal of security, under the condition of noncooperation game, the specific investments on East China Sea are different to the traditional specific investments. Suppose the total revenue is constant, more specific investments on East China Sea will improve the status in negotiation. We measure the amount of specific investments of China and Japan in 4 respects and find that Japan invests more on East China Sea than China.At the end of the thesis, we suggest a strategy of active shelving about the residual rights of control which including two respects. On the one hand, although shelving the residual rights of control, we should negotiate on the special rights actively, which is helpful for the dividing of all rights between two countries at last in the future. On the other hand, we should emphasize the special investments on East China Sea, because it is benefit for the peace of the whole area.