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Incentives and stability of international climate coalitions: An integrated assessment

  • Bosetti, Valentina
  • Carraro, Carlo
  • De Cian, Enrica
  • Massetti, Emanuele
  • Tavoni, Massimo

This paper analyses the incentives to participate in an international climate agreement and the stability of the resulting climate coalition using the integrated assessment model WITCH. Coalition stability is assessed under alternative assumptions concerning the pure rate of time preference, the aggregation of social welfare, and the severity of climate damages. The profitability, stability, and strong potential internal stability of a number of coalitions, those potentially effective in reducing GHG emissions, is explored in the paper. The main conclusion is that only the grand coalition, i.e. a coalition where all world regions cooperate to reduce emissions, can maintain GHG concentration below 550ppm CO2-eq. However, this coalition is not internally stable, even when allowing for monetary transfers across world regions. Nonetheless, the paper also shows that strongly potentially internally stable coalitions exist, though of smaller size, which can mitigate global warming and limit GHG concentrations to 600ppm CO2-eq.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 55 (2013)
Issue (Month): C ()
Pages: 44-56

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Handle: RePEc:eee:enepol:v:55:y:2013:i:c:p:44-56
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Valentina Bosetti & David Tomberlin, 2004. "Fondazione Eni Enrico Mattei," Working Papers 2004.102, Fondazione Eni Enrico Mattei.
  2. BRECHET, Thierry & GERARD, François & TULKENS, Henry, 2007. "Climate coalitions: a theoretical and computational appraisal," CORE Discussion Papers 2007003, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Nagashima, Miyuki & Dellink, Rob & van Ierland, Ekko & Weikard, Hans-Peter, 2009. "Stability of international climate coalitions -- A comparison of transfer schemes," Ecological Economics, Elsevier, vol. 68(5), pages 1476-1487, March.
  4. Joseph E. Stiglitz & G. Frank Mathewson (ed.), 1986. "New Developments in the Analysis of Market Structure," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262690934, June.
  5. Johannes Bollen & Bruno Guay & Stéphanie Jamet & Jan Corfee-Morlot, 2009. "Co-Benefits of Climate Change Mitigation Policies: Literature Review and New Results," OECD Economics Department Working Papers 693, OECD Publishing.
  6. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Valentina Bosetti & Enrica De Cian, 2013. "A Good Opening: The Key to Make the Most of Unilateral Climate Action," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 255-276, October.
  8. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
  9. Carlo Carraro & Johan Eyckmans & Michael Finus, 2005. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2005.50, Fondazione Eni Enrico Mattei.
  10. Asheim, Geir B. & Froyn, Camilla Bretteville & Hovi, Jon & Menz, Fredric C., 2006. "Regional versus global cooperation for climate control," Journal of Environmental Economics and Management, Elsevier, vol. 51(1), pages 93-109, January.
  11. Hanemann, William Michael, 2008. "What is the economic cost of climate change?," CUDARE Working Paper Series 1071, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
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