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A dynamic climate negotiation game achieving full cooperation

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  • Okada, Akira

Abstract

We present a repeated participation game where countries form a coalition for international environmental agreements over infinitely many periods. Countries may leave and re-enter coalitions. Payoff transfers are possible. In contrast to the literature on stable coalitions in a static model, we show that there exists a state-dependent subgame perfect equilibrium where the grand coalition forms in every period if countries are sufficiently patient. The grand coalition forms under countries' self-fulfilling belief that small coalitions will dissolve or enlarge to the grand coalition with an unfavorable transfer to non-participants. We further show that if coalitions are irreversible, the grand coalition gradually forms in finitely many periods in every Markov perfect equilibrium. The results are independent of a particular solution for the bargaining problem of coalition benefits.

Suggested Citation

  • Okada, Akira, 2023. "A dynamic climate negotiation game achieving full cooperation," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 657-669.
    • Handle: RePEc:eee:jeborg:v:214:y:2023:i:c:p:657-669
    DOI: 10.1016/j.jebo.2023.08.019
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    More about this item

    Keywords

    Climate negotiation; Cooperation; Dynamic game; International agreement; Stable coalition;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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