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Coalition Formation under Uncertainty: The Stability Likelihood of an International Climate Agreement

Author

Listed:
  • Rob Dellink

    (Wageningen University)

  • Michael Finus

    (Institute of Economic Theory and University of Hagen)

  • Niels Olieman

    (Wageningen University)

Abstract

Results derived from empirical analyses on the stability of climate coalitions are usually very sensitive to the large uncertainties associated with the benefits and costs of climate policies. This paper provides the methodology of Stability Likelihood that links uncertainty about benefits and costs of climate change to the stability analysis of coalitions in a stochastic, empirical setting. We show that the concept of Stability Likelihood improves upon the robustness and interpretation of stability analysis. Our numerical application is based on a modified version of the climate model STACO. It turns out that the only non-trivial coalition structure with a relatively high Stability Likelihood (around 25 percent) is a coalition between the European Union and Japan, though quantitative results depend especially on the variance in regional benefits from abatement.

Suggested Citation

  • Rob Dellink & Michael Finus & Niels Olieman, 2005. "Coalition Formation under Uncertainty: The Stability Likelihood of an International Climate Agreement," Working Papers 2005.98, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2005.98
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    Cited by:

    1. Alfred Endres, 2008. "Ein Unmöglichkeitstheorem für die Klimapolitik?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 9(3), pages 350-382, August.

    More about this item

    Keywords

    Climate change; Coalition formation; International environmental agreements; Uncertainty;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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