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Global Climate Change Mitigation: Strategic Incentives

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  • Sigit Perdana and Rod Tyers

Abstract

Central to global agreement on carbon emissions are strategic interactions amongst regions over abatement policy and the benefits to be shared. These are re-examined in this paper, in which benefits from mitigation stem from a meta-analysis that links carbon concentration with region-specific measures of economic welfare. Implementation costs are then drawn from a highly disaggregated model of global economic performance. Multiplayer games are then constructed, the results from which are sensitive to embodied temperature scenarios and discount rates but robustly reveal that the U.S. and China would be net gainers from unilateral implementation in net present value terms. The dominant strategy for all other countries is to free ride. Net gains to the three large economies are bolstered by universal adoption, which could be induced by affordable side payments. Yet the downside is that net gains to all regions are negative over two decades, rendering commitment to abatement politically difficult.

Suggested Citation

  • Sigit Perdana and Rod Tyers, 2020. "Global Climate Change Mitigation: Strategic Incentives," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 183-206.
    • Handle: RePEc:aen:journl:ej41-3-perdana
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    Cited by:

    1. Sigit Perdana & Marc Vielle, 2023. "Carbon border adjustment mechanism in the transition to net-zero emissions: collective implementation and distributional impacts," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 25(3), pages 299-329, July.
    2. Wang, Haifei & Guo, Ting & Tang, Qingliang, 2021. "The effect of national culture on corporate green proactivity," Journal of Business Research, Elsevier, vol. 131(C), pages 140-150.

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    JEL classification:

    • F0 - International Economics - - General

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