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Climate Change and Game Theory

Author

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  • Peter Wood

    () (Resource Management in Asia-Pacific Program, Crawford School of Public Policy, Australian National University)

Abstract

This survey paper examines the problem of achieving global cooperation to reduce greenhouse gas emissions. Contributions to this problem are reviewed from non-cooperative game theory, cooperative game theory, and implementation theory. Solutions to games where players have a continuous choice about how much to pollute, games where players make decisions about treaty participation, and games where players make decisions about treaty ratification, are examined. The implications of linking cooperation on climate change with cooperation on other issues, such as trade, is examined. Cooperative and non-cooperative approaches to coalition formation are investigated in order to examine the behaviour of coalitions cooperating on climate change. One way to achieve cooperation is to design a game, known as a mechanism, whose equilibrium corresponds to an optimal outcome. This paper examines some mechanisms that are based on conditional commitments, and could lead to substantial cooperation.

Suggested Citation

  • Peter Wood, 2010. "Climate Change and Game Theory," Environmental Economics Research Hub Research Reports 1062, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:eenhrr:1062
    as

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    File URL: https://crawford.anu.edu.au/research_units/eerh/pdf/EERH_RR62.pdf
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    References listed on IDEAS

    as
    1. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    2. Geoffroy de Clippel & Roberto Serrano, 2008. "Bargaining, Coalitions and Externalities: a Comment on Maskin," Working Papers 2008-16, Brown University, Department of Economics.
    3. Frank Jotzo & Regina Betz, 2009. "Australia's emissions trading scheme: opportunities and obstacles for linking," Climate Policy, Taylor & Francis Journals, vol. 9(4), pages 402-414, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. EERH Research Reports: July 2010
      by David Stern in Stochastic Trend on 2010-08-06 11:32:00
    2. EERH Research Reports: June 2010
      by David Stern in Stochastic Trend on 2010-07-03 15:06:00

    Citations

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    Cited by:

    1. Kennedy, Matthew & Basu, Biswajit, 2014. "An analysis of the climate change architecture," Renewable and Sustainable Energy Reviews, Elsevier, vol. 34(C), pages 185-193.
    2. Dobes Leo & Jotzo Frank & Stern David I., 2014. "The Economics of Global Climate Change: A Historical Literature Review," Review of Economics, De Gruyter, vol. 65(3), pages 281-320, December.
    3. Malerba, Daniele, 2020. "Poverty alleviation and local environmental degradation: An empirical analysis in Colombia," World Development, Elsevier, vol. 127(C).
    4. Molina, Chai & Akcay, Erol & Dieckmann, Ulf & Levin, Simon & Rovenskaya, Elena A., 2018. "Combating climate change with matching-commitment agreements," SocArXiv 7yc3g, Center for Open Science.
    5. Herve Moulin & Indrajit Ray & Sonali Sen Gupta, 2013. "Coarse Correlated Equilibria in an Abatement Game," Discussion Papers 13-11, Department of Economics, University of Birmingham.
    6. 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.
    7. Jing Wu & Jean-Claude Thill, 2018. "Climate change coalition formation and equilibrium strategies in mitigation games in the post-Kyoto Era," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(4), pages 573-598, August.
    8. Meißner, Nathalie, 2013. "The incentives of private companies to invest in protected area certificates: How coalitions can improve ecosystem sustainability," Ecological Economics, Elsevier, vol. 95(C), pages 148-158.
    9. Jin Zhugang & Can Wang & Wenjia Cai, 2013. "Cooperation is essential for 2 centigrade degrees Target: a new perspective from the Dynamic Game Model," Review of Applied Socio-Economic Research, Pro Global Science Association, vol. 5(1), pages 100-105, June.
    10. Wu, Pei-Ing & Chen, Chai Tzu & Cheng, Pei-Ching & Liou, Je-Liang, 2014. "Climate game analyses for CO2 emission trading among various world organizations," Economic Modelling, Elsevier, vol. 36(C), pages 441-446.
    11. Keswani Mehra, Meeta & Mukherjee, Saptarshi & Dutta, Monica, 2012. "Toward a framework for implementation of climate change treaty through self-enforcing mechanisms," MPRA Paper 36286, University Library of Munich, Germany.
    12. Bašič, Aleksandra Murks & Kamal, Salahuddin M. & Almazroui, Mansour & Al-Marzouki, Fahad M., 2015. "A mathematical model for the climate change: Can unpredictability offset the temptations to pollute?," Applied Mathematics and Computation, Elsevier, vol. 265(C), pages 187-195.
    13. Fran Humphries, 2018. "Sharing aquatic genetic resources across jurisdictions: playing ‘chicken’ in the sea," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(4), pages 541-556, August.

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    More about this item

    Keywords

    Climate change negotiations; game theory; implementation theory; coalition formation; subgame perfect equilibrium;
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