Dealing with climate change requires that all countries engage in costlyefforts to reduce their emissions. Reaching this objective has so far beenelusive because it is in the best interest of each country to let the othersdo the effort and benefit itself from a better environment. The presence ofnegative externalities and strategic behavior have made game theory anatural paradigm to design an international environmental agreement (IEA)that codifies what countries should do. Considering that countries aresovereign and no supranational entity can impose an agreement, a stream ofliterature adopted a noncooperative mode of play to the formation of anenvironmental coalition. On the other hand, as joint optimization of allcountries' payoff leads to the best outcome, cooperative games approach hasalso been proposed to share the cost of climate change. Both approaches havetheir pros and cons.In this paper, we propose a model of coalition formation that combines bothcooperative and noncooperative modes of play. Starting from any givencoalition, we implement a Markov process that shows sequentially whichcountries join or leave the coalition until reaching an absorbing state. Allpossible sequential scenarios are considered and an allocation to the playeris made taking into account individual rationality. An illustration withvulnerable and invulnerable countries to pollution is given.