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A two-level dynamic game of carbon emission trading between Russia, China, and Annex B countries

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  • Bernard, A.
  • Haurie, A.
  • Vielle, M.
  • Viguier, L.

Abstract

This paper proposes a computable dynamic game model of the strategic competition between Russia and developing countries (DCs), mainly represented by China, on the international market of emission permits created by the Kyoto Protocol. The model uses a formulation of (i) a demand function for permits from Annex B countries and (ii) marginal abatement costs (MAC) in Russia and China provided by two detailed models. GEMINI-E3 is a computable general equilibrium model that provides the data to estimate Annex B demand for permits and MACs in Russia. POLES is a partial equilibrium model that is used to obtain MAC curves for China. The competitive scenario is compared with a monopoly situation where only Russia is allowed to play strategically. The impact of allowing DCs to intervene on the international emission trading market is thus assessed.

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  • Bernard, A. & Haurie, A. & Vielle, M. & Viguier, L., 2008. "A two-level dynamic game of carbon emission trading between Russia, China, and Annex B countries," Journal of Economic Dynamics and Control, Elsevier, vol. 32(6), pages 1830-1856, June.
    • Handle: RePEc:eee:dyncon:v:32:y:2008:i:6:p:1830-1856
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    17. Shuhua Chang & Xinyu Wang & Alexander Shananin, 2015. "Modeling and Computation of Mean Field Equilibria in Producers' Game with Emission Permits Trading," Papers 1506.04869, arXiv.org.
    18. Xiao Dai & Jian Wu & Liang Yan & Qian Zhang & Fangli Ruan & Dan Wang, 2019. "Industrial Structure Restructuring, Production Factor Allocation Analysis: Based on a Mineral Resource-Intensive City—Jiaozuo City," Sustainability, MDPI, vol. 11(4), pages 1-19, February.
    19. Marc VIELLE & Laurent VIGUIER & Alain HAURIE & Alain BERNARD, 2010. "A Two-level Computable Equilibrium Model to Assess the Strategic Allocation of Emission Allowances Within the European Union," EcoMod2004 330600153, EcoMod.
    20. Wu, Pei-Ing & Chen, Chai Tzu & Cheng, Pei-Ching & Liou, Je-Liang, 2014. "Climate game analyses for CO2 emission trading among various world organizations," Economic Modelling, Elsevier, vol. 36(C), pages 441-446.
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    22. S. Du & F. Ma & Z. Fu & L. Zhu & J. Zhang, 2015. "Game-theoretic analysis for an emission-dependent supply chain in a ‘cap-and-trade’ system," Annals of Operations Research, Springer, vol. 228(1), pages 135-149, May.

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