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International Negotiations on Climate Change: A Non-cooperative Game Analysis of the Kyoto Protocol

Author

Listed:
  • Akira Okada

    (Institute of Economic Research, Kyoto University)

Abstract

We investigate international negotiations on CO2 emissions reduction in the Kyoto Protocal by non-cooperative multilateral bargaining theory. The negotiation model has two phases, (i) allocating emission reductions to countries and (ii) international emissions trading. Anticipating the competitive equilibrium of emissions trading, each country evaluates an agreement of reduction commitments. We formulate the negotiation process as an n-person sequential bargaining game with random proposers. We show that there exists a nunique stationary subgame perfect equilibrium of the bargaining game and that the equilibrium emissions reduction proposed by every country converges to the asymmetric Nash bargaining solution as the probability of negotiation failure by rejection goes to zero. The weights of countries in the asymmetric Nash solution are determined by thier probabilities to be selected as proposers. Finally, we present numerical results based on actual emission data on the European Union (EU), the former Soviet Union (FSU), Japan and the United States (USA).

Suggested Citation

  • Akira Okada, 2004. "International Negotiations on Climate Change: A Non-cooperative Game Analysis of the Kyoto Protocol," KIER Working Papers 579, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:579
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