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The Kyoto Protocol: an economic and game-theoretic interpretation

Author

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  • CHANDER, Parkash
  • TULKENS, Henry
  • VAN YPERSELE, Jean-Pascal
  • WILLEMS, Stephane

Abstract

Calling upon both positive and normative economics, we attempt to characterize the issues at stake in the current international negotiations on climatic change. We begin (section 2) by reviewing the main features of the Protocol. Then (Section 3), we identify by means of an elementary economic model the main concepts involved: optimality, non cooperation, coalitional stability. We observe (Section 4) that "business-as-us u al", "no regrets" and other domestic policies are alternative ways to conceive of the non cooperative equilibrium prevailing before the negotiations. Which one should be retained? Data suggest that the prevailing situation is a mixed one, exhibiting characteristics of several of these policies. We then turn (Section 5) to interpreting the Protocol. While there is no firm basis to assert that the emission quotas chosen at Kyoto correspond to optimal emissions (although they are a step in the right direction), economic and game theoretical arguments are put forward to support the view that for achieving these emission quotas, trading ensures efficiency, as well as coalitional stability for the agreement provided it is adopted at the largest scale i.e. worldwide. Finally, it is argued in Section 6 that beyond the Kyoto Protocol, the achievement of coalitionally stable optimality at the world level is a real possibility with trading, provided agreement can be reached in the future as to appropriate reference emission levels, in particular as far as developing countries are concerned.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • CHANDER, Parkash & TULKENS, Henry & VAN YPERSELE, Jean-Pascal & WILLEMS, Stephane, 2002. "The Kyoto Protocol: an economic and game-theoretic interpretation," LIDAM Reprints CORE 1590, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1590
    DOI: 10.1007/978-0-387-25534-7_12
    Note: In : B. Kriström, P. Dasgupta and K-G. Löfgren (eds.), Economic Theory for the Environment. Essays in Honour of Karl-Göran Mäler. Cheltenham, Edward Elgar, 98-117, 2002
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    Cited by:

    1. Johan Eyckmans & Michael Finus, 2006. "New roads to international environmental agreements: the case of global warming," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 7(4), pages 391-414, March.
    2. De Cian, Enrica & Tavoni, Massimo, 2012. "Do technology externalities justify restrictions on emission permit trading?," Resource and Energy Economics, Elsevier, vol. 34(4), pages 624-646.
    3. Thierry Brechet & Henry Tulkens, 2015. "Climate Policies: A Burden, or a Gain?," The Energy Journal, , vol. 36(3), pages 155-170, July.
    4. Bertrand Hamaide, 2003. ""Economic" and "Political" cooperation in various climate policy scenarios," Climate Policy, Taylor & Francis Journals, vol. 3(2), pages 171-177, June.
    5. László Á. Kóczy, 2018. "Partition Function Form Games," Theory and Decision Library C, Springer, number 978-3-319-69841-0, December.
    6. Toshiyuki Fujita, 2004. "Design of international environmental agreements under uncertainty," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(2), pages 103-118, June.
    7. Johan Eyckmans & Henry Tulkens, 2006. "Simulating Coalitionally Stable Burden Sharing Agreements for the Climate Change Problem," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 218-249, Springer.
    8. Paolo Buonanno & Carlo Carraro & Efrem Castelnuovo & Marzio Galeotti, 2001. "Emission Trading Restrictions with Endogenous Technological Change," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 1(3), pages 379-395, July.
    9. Thierry Bréchet & François Gerard & Henry Tulkens, 2011. "Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal," The Energy Journal, , vol. 32(1), pages 49-76, January.
    10. Porchiung Chou & Cheickna Sylla, 2008. "The formation of an international environmental agreement as a two-stage exclusive cartel formation game with transferable utilities," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 8(4), pages 317-341, December.
    11. Chander, Parkash & Tulkens, Henry, 2006. "Cooperation, Stability and Self-Enforcement in International Environmental Agreements: A Conceptual Discussion," Coalition Theory Network Working Papers 12170, Fondazione Eni Enrico Mattei (FEEM).
    12. Cairns, Robert D. & Lasserre, Pierre, 2006. "Implementing carbon credits for forests based on green accounting," Ecological Economics, Elsevier, vol. 56(4), pages 610-621, April.
    13. Lasserre, Pierre & Soubeyran, Antoine, 2003. "A Ricardian model of the tragedy of the commons," Journal of Economic Behavior & Organization, Elsevier, vol. 50(1), pages 29-45, January.
    14. G. Zaccour, 2003. "Computation of Characteristic Function Values for Linear-State Differential Games," Journal of Optimization Theory and Applications, Springer, vol. 117(1), pages 183-194, April.
    15. Chander, Parkash & Tulkens, Henry, 2006. "Cooperation, Stability and Self-Enforcement in International Environmental Agreements: A Conceptual Discussion," Coalition Theory Network Working Papers 12170, Fondazione Eni Enrico Mattei (FEEM).
    16. Shreekant Gupta, 2000. "Incentive-Based Approaches for Mitigating Greenhouse Gas Emissions: Issues and Prospects for India," Working papers 85, Centre for Development Economics, Delhi School of Economics.
    17. Lixon, Benoit & Thomassin, Paul J. & Hamaide, Bertrand, 2008. "Industrial output restriction and the Kyoto protocol: An input-output approach with application to Canada," Ecological Economics, Elsevier, vol. 68(1-2), pages 249-258, December.
    18. VAN STEENBERGHE, Vincent, 2004. "Core-stable and equitable allocations of greenhouse gas emission permits," LIDAM Discussion Papers CORE 2004075, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    19. Toshiyuki Fujita, 2004. "Design of international environmental agreements under uncertainty," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(2), pages 103-118, June.
    20. Daniel G. Arce M., 2000. "The Evolution of Heterogeneity in Biodiversity and Environmental Regimes," Journal of Conflict Resolution, Peace Science Society (International), vol. 44(6), pages 753-772, December.
    21. CHANDER, Parkash & TULKENS, Henry, 2011. "The kyoto Protocol, the Copenhagen Accord, the Cancun Agreements, and beyond: an economic and game theoretical exploration and interpretation," LIDAM Discussion Papers CORE 2011051, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    22. Carraro, Carlo & Bosello, Francesco & Buchner, Barbara & Raggi, Davide, 2003. "Can Equity Enhance Efficiency? Some Lessons from Climate Negotiations," CEPR Discussion Papers 3606, C.E.P.R. Discussion Papers.

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