Leading the Way: Coalitional Stability in Technological Cooperation & Sequential Climate Policy
AbstractThe World's nations have yet to reach a truly effective treaty to control the emission of greenhouse gases.� The importance of compatibility with private incentives of individual countries has been acknowledged (at least by game theorists) in designing climate policies for the post-Kyoto world.� Individually incentive-compatible agreements, however, may still be spoilt if coalitional incentives to deviate as a group exist.� As a first step toward understanding these incentives from a game-theoretic perspective, we propose a hybrid noncooperative-cooperative game theory model of coalition formation in technology collaboration.� Serious coalitional instabilities inherent to the existing climate policy architectures are revealed.� It turns out that coalitionally stable agreements are achieved via intermediate self-selecting subcoalitions.� The sequence of coalitions forming and the size of the direct and spillover effects of R&D collaboration on countries' individual production technologies determine the effectiveness of the agreements to reduce carbon emissions.� These coalitional group motives are already becoming important in the practice of climate change negotiations.
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Bibliographic InfoPaper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 585.
Date of creation: 01 Dec 2011
Date of revision:
Climate change policy; Coalitions; Cooperative game theory; Environmental agreements; Externalities; Mechanism design; Noncooperative game theory; R&D;
Find related papers by JEL classification:
- C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- F53 - International Economics - - International Relations and International Political Economy - - - International Agreements and Observance; International Organizations
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-ENE-2012-01-03 (Energy Economics)
- NEP-ENV-2012-01-03 (Environmental Economics)
- NEP-GTH-2012-01-03 (Game Theory)
- NEP-INO-2012-01-03 (Innovation)
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