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A brave new world? Kantian–Nashian interaction and the dynamics of global climate change mitigation

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  • Grafton, R. Quentin
  • Kompas, Tom
  • Long, Ngo Van

Abstract

We model game-theoretic situations in which agents motivated by Kantian ethics interact with conventional Nashian agents. We define the concept of generalized Kant–Nash equilibrium which encompasses the Nash equilibrium, the Kantian equilibrium and the Kant–Nash equilibrium as special cases. We show the existence and uniqueness of a Kant–Nash equilibrium in a static game of climate change mitigation, and derive its properties. In a dynamic setting, we analyze a differential game of climate change mitigation in the presence of both types of agents, and compare their Markov emission strategies. For both the static model and the dynamic model, as the population share of Kantians increases, the quality of the environment improves, and both types of agents are better off.

Suggested Citation

  • Grafton, R. Quentin & Kompas, Tom & Long, Ngo Van, 2017. "A brave new world? Kantian–Nashian interaction and the dynamics of global climate change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 31-42.
    • Handle: RePEc:eee:eecrev:v:99:y:2017:i:c:p:31-42
    DOI: 10.1016/j.euroecorev.2017.04.002
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    Keywords

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    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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