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Climate coalitions: a theoretical and computational appraisal

  • BRECHET, Thierry

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • GERARD, François

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • TULKENS, Henry

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

Using an updated version of the CWS model (introduced by Eyckmans and Tulkens in Resource and Energy Economics 2003), this paper intends to evaluate with numbers the respective merits of two competing notions of coalition stability in the standard global public goods model as customarily applied to the climate change problem. After a reminder of the model structure and of the definition of the two game theoretical stability notions involved namely, core stability and internal-external stability, the former property is shown to hold for the grand coalition in the CWS model only if resource transfers of a specific form between countries are introduced. It is further shown that while the latter property holds neither for the grand coalition nor for most large coalitions, it is nevertheless verified in a weak sense that involves transfers (dubbed "potential internal stability") for most small coalitions. The reason for this difference is brought to light, namely the differing rationale that inspires the transfers in either case. Finally, it is shown that the stable coalitions that perform best (in terms of carbon concentration and global welfare) always are composed of both industrialized and developing countries. Two sensitivity analyses confirm the robustness of all these results.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2007003.

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Date of creation: 01 Feb 2007
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Handle: RePEc:cor:louvco:2007003
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  1. d'ASPREMONT, Claude & JACQUEMIN, Alexis & GABSZEWICZ, Jean J. & WEYMARK, John A., . "On the stability of collusive price leadership," CORE Discussion Papers RP -522, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. CHANDER, Parkash & TULKENS, Henry, . "Cooperation, stability, and self-enforcement in international environmental agreements: a conceptual discussion," CORE Discussion Papers RP -2092, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Eyckmans, Johan & Finus, Michael, 2009. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Stirling Economics Discussion Papers 2009-10, University of Stirling, Division of Economics.
  4. CHANDER, Parkash & TULKENS, Henry, 1995. "The Core of an Economy with Multilateral Environmental Externalities," CORE Discussion Papers 1995050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. EYCKMANS, Johan & TULKENS, Henry, . "Simulating coalitionally stable burden sharing agreements for the climate change problem," CORE Discussion Papers RP -1677, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Carraro, Carlo & Eyckmans, Johan & Finus, Michael, 2005. "Optimal Transfers and Participation Decisions in International Environmental Agreements," CEPR Discussion Papers 5046, C.E.P.R. Discussion Papers.
  7. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
  8. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-94, Supplemen.
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