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A strategic analysis of global warming: Theory and some numbers

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  • Dutta, Prajit K.
  • Radner, Roy

Abstract

We model the global warming process as a dynamic commons game in which the players are countries, their actions at each date produce emissions of greenhouse gases, and the state variable is the current stock of greenhouse gases. The theoretical analysis is complemented by a calibration exercise. The first set of results establishes theoretically, and then with illustrative numbers, the over-emissions due to a "tragedy of the commons." The power of simple sanctions to lower emissions and increase welfare is then examined as is the effect of cost asymmetry. Finally, a complete theoretical charactrization is provided for the best equilibrium, and it is shown that it has a very simple structure; it involves a constant emission rate through time.

Suggested Citation

  • Dutta, Prajit K. & Radner, Roy, 2009. "A strategic analysis of global warming: Theory and some numbers," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 187-209, August.
  • Handle: RePEc:eee:jeborg:v:71:y:2009:i:2:p:187-209
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    References listed on IDEAS

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    2. Dutta, Prajit K., 1991. "What do discounted optima converge to?: A theory of discount rate asymptotics in economic models," Journal of Economic Theory, Elsevier, vol. 55(1), pages 64-94, October.
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    7. Tornell, Aaron & Velasco, Andes, 1992. "The Tragedy of the Commons and Economic Growth: Why Does Capital Flow from Poor to Rich Countries?," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1208-1231, December.
    8. Ngo Long & Gerhard Sorger, 2006. "Insecure property rights and growth: the role of appropriation costs, wealth effects, and heterogeneity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 513-529, August.
    9. Dutta, Prajit K & Sundaram, Rangarajan, 1992. "Markovian Equilibrium in a Class of Stochastic Games: Existence Theorems for Discounted and Undiscounted Models," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 2(2), pages 197-214, April.
    10. Dutta, P.K., 1991. "What Do Discounted Optima Converge To? A Theory of Discount Rate Asymptotics in Economic Models," RCER Working Papers 264, University of Rochester - Center for Economic Research (RCER).
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    Cited by:

    1. De Luca, Giacomo & Sekeris, Petros & Spengler, Dominic, 2015. "Can Violence Harm Cooperation? Experimental Evidence," MPRA Paper 63697, University Library of Munich, Germany.
    2. Geir Asheim & Bjart Holtsmark, 2009. "Renegotiation-Proof Climate Agreements with Full Participation: Conditions for Pareto-Efficiency," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(4), pages 519-533, August.
    3. Katerina Sherstyuk & Nori Tarui & Majah-Leah Ravago & Tatsuyoshi Saijo, 2011. "Payment schemes in random-termination experimental games," Working Papers 2011-9, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    4. G. Calzolari & M. Casari & R. Ghidoni, 2016. "Carbon is Forever: a Climate Change Experiment on Cooperation," Working Papers wp1065, Dipartimento Scienze Economiche, Universita' di Bologna.
    5. Katerina Sherstyuk & Nori Tarui & Majah-Leah V. Ravago & Tatsuyoshi Saijo, 2016. "Intergenerational Games with Dynamic Externalities and Climate Change Experiments," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, pages 247-281.
    6. Rodrigo Harrison & Roger Lagunoff, 2015. "Tipping Points and Business-as-Usual in a Global Carbon Commons," Levine's Working Paper Archive 786969000000001019, David K. Levine.
    7. repec:spr:climat:v:142:y:2017:i:3:d:10.1007_s10584-017-1959-3 is not listed on IDEAS
    8. Mwangi, John Kennedy & Lee, Wen-Jhy & Chang, Yu-Cheng & Chen, Chia-Yang & Wang, Lin-Chi, 2015. "An overview: Energy saving and pollution reduction by using green fuel blends in diesel engines," Applied Energy, Elsevier, pages 214-236.
    9. Mason, Charles F. & Polasky, Stephen & Tarui, Nori, 2017. "Cooperation on climate-change mitigation," European Economic Review, Elsevier, vol. 99(C), pages 43-55.
    10. Petros G. Sekeris, 2014. "The tragedy of the commons in a violent world," RAND Journal of Economics, RAND Corporation, pages 521-532.
    11. Rodrigo Harrison & Roger Lagunoff, 2015. "Tipping Points and Business-as-Usual in a Global Carbon Commons," Documentos de Trabajo 458, Instituto de Economia. Pontificia Universidad Católica de Chile..
    12. Kratzsch, Uwe & Sieg, Gernot & Stegemann, Ulrike, 2012. "An international agreement with full participation to tackle the stock of greenhouse gases," Economics Letters, Elsevier, vol. 115(3), pages 473-476.
    13. Sang-Chul Suh, 2016. "The Failure of Climate Change Negotiations: Irrational Countries Exclude the Poor and the Future Generations," Working Papers 1607, University of Windsor, Department of Economics.
    14. Rodrigo Harrison & Roger Lagunoff, 2013. "Dynamic Mechanism Design for a Global Commons," Documentos de Trabajo 442, Instituto de Economia. Pontificia Universidad Católica de Chile..
    15. Maxwell Burton-Chellew & Robert May & Stuart West, 2013. "Combined inequality in wealth and risk leads to disaster in the climate change game," Climatic Change, Springer, vol. 120(4), pages 815-830, October.
    16. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.
    17. Holtsmark, Katinka & Midttømme, Kristoffer, 2015. "The Dynamics of Linking Permit Markets," Memorandum 02/2015, Oslo University, Department of Economics.
    18. repec:eee:jeeman:v:84:y:2017:i:c:p:173-188 is not listed on IDEAS
    19. Charles F. Mason & Neil Wilmot, 2015. "Modeling Damages in Climate Policy Models: Temperature-Based or Carbon-Based?," CESifo Working Paper Series 5287, CESifo Group Munich.

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