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OPEC's Response to International Climate Agreements

Listed author(s):
  • Jan Bråten

    ()

  • Rolf Golombek

This paper studies a game between a group of countries that have agreed to participate in an international climate agreement (the signatories) and OPEC. The purpose of the signatories is to design carbon taxes that maximize their total net income, given a goal on global carbon emissions. As a response to the climate agreement, OPEC imposes an oil tax on its member states that maximizes OPEC's profits. Within a numerical model we find the subgame-perfect equilibrium of a game in which each player chooses when to fix his decision variables. It is shown that in equilibrium the group of signatories chooses to be the leader and OPEC chooses to be the follower. It is demonstrated, however, that for both agents the order of move is of minor (numerical) importance. Hence, the players have limited incentives for strategic behaviour. Copyright Kluwer Academic Publishers 1998

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File URL: http://hdl.handle.net/10.1023/A:1008299528789
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Article provided by Springer & European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 12 (1998)
Issue (Month): 4 (December)
Pages: 425-442

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Handle: RePEc:kap:enreec:v:12:y:1998:i:4:p:425-442
DOI: 10.1023/A:1008299528789
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  1. Dermot Gately, 1995. "Strategies for OPEC's Pricing and Output Decisions," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 1-38.
  2. Pearce, David W, 1991. "The Role of Carbon Taxes in Adjusting to Global Warming," Economic Journal, Royal Economic Society, vol. 101(407), pages 938-948, July.
  3. Golombek, Rolf & Hagem, Cathrine & Hoel, Michael, 1995. "Efficient incomplete international climate agreements," Resource and Energy Economics, Elsevier, vol. 17(1), pages 25-46, May.
  4. Rolf Golombek & Jan Braten, 1994. "Incomplete International Climate Agreements: Optimal Carbon Taxes, Market Failures and Welfare Effects," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 141-166.
  5. Jean-Marc Burniaux & John P. Martin & Giuseppe Nicoletti & Joaquim Oliveira Martins, 1991. "GREEN - - A Multi-Region Dynamic General Equilibrium Model for Quantifying the Costs of Curbing CO2 Emissions: A Technical Manual," OECD Economics Department Working Papers 104, OECD Publishing.
  6. William R. Cline, 1992. "Economics of Global Warming, The," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 39, November.
  7. John Pezzey, 1992. "Analysis of Unilateral CO2 Control in the European Community and OECD," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 159-172.
  8. Morris A. Adelman, 1993. "Modelling World Oil Supply," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 1-32.
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