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Games of Climate Change with International Trade

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  • Claudia Kemfert
  • Wietze Lise
  • Richard Tol

    ()

Abstract

We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries' emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications, optimal emission reduction is unaffected by trade. We therefore specify the model further, calibrating it to larger models that estimate the costs of emission reduction, trade effects, and impacts of climate change. If trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects. If trade effects are determined by relative emission reduction efforts in other countries, cooperation becomes easier. Carbon leakage does not affect our qualitative insights, although it does change the numbers. Copyright Kluwer Academic Publishers 2004

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Bibliographic Info

Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 28 (2004)
Issue (Month): 2 (June)
Pages: 209-232

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Handle: RePEc:kap:enreec:v:28:y:2004:i:2:p:209-232

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Web page: http://www.springerlink.com/link.asp?id=100263

Related research

Keywords: carbon leakage; climate change; coalition formation; greenhouse gas emission reduction; international trade; optimal emission control;

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References

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  1. Copeland, Brian R. & Taylor, M. Scott, 2005. "Free trade and global warming: a trade theory view of the Kyoto protocol," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 205-234, March.
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  6. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
  7. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  8. Barrett, Scott, 1997. "The strategy of trade sanctions in international environmental agreements," Resource and Energy Economics, Elsevier, vol. 19(4), pages 345-361, November.
  9. Carraro, Carlo & Siniscalco, Domenico, 1995. "R&D Cooperation and the Stability of International Environmental Agreements," CEPR Discussion Papers 1154, C.E.P.R. Discussion Papers.
  10. Chwe Michael Suk-Young, 1994. "Farsighted Coalitional Stability," Journal of Economic Theory, Elsevier, vol. 63(2), pages 299-325, August.
  11. Bernstein, Paul M. & Montgomery, W. David & Rutherford, Thomas F., 1999. "Global impacts of the Kyoto agreement: results from the MS-MRT model," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 375-413, August.
  12. Ioannidis, Alexis & Papandreou, Andreas & Sartzetakis, Eftichios, 2000. "International Environmental Agreements: a Literature Review," Cahiers de recherche 0008, GREEN.
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  14. Richard S.J. Tol & Wietze Lise & Benoit Morel & Bob C.C. van der Zwaan, 2001. "Technology Development And Diffusion And Incentives To Abate Greenhouse Gas Emissions," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-6, Research unit Sustainability and Global Change, Hamburg University, revised Feb 2001.
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Citations

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Cited by:
  1. I. Hakan Yetkiner, 2003. "Is There An Indispensable Role For Government During Recovery From An Earthquake? A Theoretical Elaboration," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-25, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
  2. Satoru Kasahara & Sergey Paltsev & John Reilly & Henry Jacoby & A. Ellerman, 2007. "Climate Change Taxes and Energy Efficiency in Japan," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 37(2), pages 377-410, June.
  3. Li, Y.P. & Huang, G.H. & Chen, X., 2011. "Planning regional energy system in association with greenhouse gas mitigation under uncertainty," Applied Energy, Elsevier, vol. 88(3), pages 599-611, March.
  4. Chen, W.T. & Li, Y.P. & Huang, G.H. & Chen, X. & Li, Y.F., 2010. "A two-stage inexact-stochastic programming model for planning carbon dioxide emission trading under uncertainty," Applied Energy, Elsevier, vol. 87(3), pages 1033-1047, March.
  5. Chen, C. & Li, Y.P. & Huang, G.H., 2013. "An inexact robust optimization method for supporting carbon dioxide emissions management in regional electric-power systems," Energy Economics, Elsevier, vol. 40(C), pages 441-456.
  6. Levy, Amnon & Livermore, Jonathon, 2009. "Emission Abatement with Per Capita and Trade Considerations," Economics Working Papers, School of Economics, University of Wollongong, NSW, Australia wp09-04, School of Economics, University of Wollongong, NSW, Australia.
  7. Katrin Rehdanz & Richard S.J. Tol, 2002. "On National and International Trade in Greenhouse Gas Emission Permits," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-11, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2003.
  8. Rehdanz, Katrin & Tol, Richard S.J., 2005. "Unilateral regulation of bilateral trade in greenhouse gas emission permits," Ecological Economics, Elsevier, vol. 54(4), pages 397-416, September.
  9. Miyuki Nagashima & Rob Dellink, 2007. "Technology Spillovers and Stability of International Climate Coalitions," Working Papers 2007.98, Fondazione Eni Enrico Mattei.
  10. Roberto Roson & Richard s.J. Tol, 2003. "An Integrated Assessment Model Of Economy-Energy-Climate – The Model Wiagem: A Comment," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-26, Research unit Sustainability and Global Change, Hamburg University, revised May 2003.
  11. Vaal, Albert de & Yetkiner, I. Hakan & Zon, Adriaan van, 2002. "The cyclical advancement of drastic technologies," CCSO Working Papers 200217, University of Groningen, CCSO Centre for Economic Research.
  12. Kemfert, Claudia & Zhang, ZhongXiang, 2003. "Linking developing country's cooperation on climate control with industrialized country's R&D and technology transfer," MPRA Paper 41473, University Library of Munich, Germany.
  13. P. Michael Link, 2003. "Auswirkungen populationsdynamischer Veränderungen in Fischbeständen auf die Fischereiwirtschaft in der Barentssee," Working Papers, Research unit Sustainability and Global Change, Hamburg University FNU-29, Research unit Sustainability and Global Change, Hamburg University, revised May 2003.
  14. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.

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