IDEAS home Printed from https://ideas.repec.org/p/fae/wpaper/2016.17.html
   My bibliography  Save this paper

Climate Agreements in a Mitigation-Adaptation Game

Author

Listed:
  • Basak Bayramoglu

    () (Economie Publique, INRA, AgroParisTech, Université Paris-Saclay)

  • Michael Finus

    () (Department of Economics, University of Bath)

  • Jean-François Jacques

    () (Université Paris-Est, ERUDITE, and LEDa-CGEMP, Université Paris-Dauphine)

Abstract

We study the strategic interaction between mitigation (public good) and adaptation (private good) strategies in a climate agreement. We show that these two strategies are strategic substitutes considering various definitions of substitutability. Moreover, adaptation may cause mitigation levels between different countries to be no longer strategic substitutes but complements. We analyze under which conditions this leads to more succesful self-enforcing agreements. We argue that our results extend to many important externality problems involving public goods.

Suggested Citation

  • Basak Bayramoglu & Michael Finus & Jean-François Jacques, 2016. "Climate Agreements in a Mitigation-Adaptation Game," Working Papers 2016.17, FAERE - French Association of Environmental and Resource Economists.
  • Handle: RePEc:fae:wpaper:2016.17
    as

    Download full text from publisher

    File URL: http://faere.fr/pub/WorkingPapers/Bayramoglu_Finus_Jacques_FAERE_WP2016.17.pdf
    File Function: First version, 2016
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Scott Barrett, 2002. "Consensus Treaties," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 529-529, December.
    2. Ficre Zehaie, 2009. "The Timing and Strategic Role of Self-Protection," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(3), pages 337-350, November.
    3. Klaus Eisenack & Leonhard Kähler, 2016. "Adaptation to climate change can support unilateral emission reductions," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 258-278.
    4. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    5. Benchekroun, H. & Marrouch, W. & Ray Chaudhuri, A., 2011. "Adaptation Effectiveness and Free-Riding Incentives in International Environmental Agreements," Discussion Paper 2011-120, Tilburg University, Center for Economic Research.
    6. Michael Finus & Alejandro Caparrós (ed.), 2015. "Game Theory and International Environmental Cooperation," Books, Edward Elgar Publishing, number 15345.
    7. Marco Battaglini & Bård Harstad, 2016. "Participation and Duration of Environmental Agreements," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 160-204.
    8. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    9. El-Sayed, Abeer & Rubio, Santiago J., 2014. "Sharing R&D investments in cleaner technologies to mitigate climate change," Resource and Energy Economics, Elsevier, vol. 38(C), pages 168-180.
    10. Poyago-Theotoky, Joanna, 1995. "Equilibrium and Optimal Size of a Research Joint Venture in an Oligopoly with Spillovers," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 209-226, June.
    11. Bard Harstad, 2012. "Climate Contracts: A Game of Emissions, Investments, Negotiations, and Renegotiations," Review of Economic Studies, Oxford University Press, vol. 79(4), pages 1527-1557.
    12. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    13. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    14. Buob, Seraina & Stephan, Gunter, 2011. "To mitigate or to adapt: How to confront global climate change," European Journal of Political Economy, Elsevier, vol. 27(1), pages 1-16, March.
    15. Richard Cornes & Roger Hartley, 2007. "Aggregative Public Good Games," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(2), pages 201-219, April.
    16. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    17. Lazkano, Itziar & Marrouch, Walid & Nkuiya, Bruno, 2016. "Adaptation to climate change: how does heterogeneity in adaptation costs affect climate coalitions?," Environment and Development Economics, Cambridge University Press, vol. 21(06), pages 812-838, December.
    18. Hans-Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
    19. Santiago J. Rubio & Alistair Ulph, 2006. "Self-enforcing international environmental agreements revisited," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 233-263, April.
    20. Baumol, William J & Bradford, David F, 1972. "Detrimental Externalities and Non-Convexity of the Production Set," Economica, London School of Economics and Political Science, vol. 39(154), pages 160-176, May.
    21. Starrett, David A., 1972. "Fundamental nonconvexities in the theory of externalities," Journal of Economic Theory, Elsevier, vol. 4(2), pages 180-199, April.
    22. Fraser, Clive D., 1992. "The uniqueness of Nash equilibrium in the private provision of public goods : An alternative proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 389-390, December.
    23. Cornes, Richard & Sandler, Todd, 1984. "Easy Riders, Joint Production, and Public Goods," Economic Journal, Royal Economic Society, vol. 94(375), pages 580-598, September.
    24. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    25. Scott Barrett, 2006. "Climate Treaties and "Breakthrough" Technologies," American Economic Review, American Economic Association, vol. 96(2), pages 22-25, May.
    26. Francis Bloch, 2003. "Non-cooperative models of coalition formation in games with spillovers," Chapters,in: The Endogenous Formation of Economic Coalitions, chapter 2 Edward Elgar Publishing.
    27. Michael Finus & Bianca Rundshagen, 2009. "Membership rules and stability of coalition structures in positive externality games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 389-406, March.
    28. Haeringer, Guillaume, 2004. "Equilibrium binding agreements: a comment," Journal of Economic Theory, Elsevier, vol. 117(1), pages 140-143, July.
    29. Donsimoni, Marie-Paule & Economides, Nicholas S & Polemarchakis, Herakles M, 1986. "Stable Cartels," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 317-327, June.
    30. 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.
    31. Kolstad, Charles D., 2007. "Systematic uncertainty in self-enforcing international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 68-79, January.
    32. Cornes, Richard & Sandler, Todd, 1994. "The comparative static properties of the impure public good model," Journal of Public Economics, Elsevier, vol. 54(3), pages 403-421, July.
    33. Udo Ebert & Heinz Welsch, 2011. "Optimal response functions in global pollution problems can be upward-sloping: accounting for adaptation," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 13(2), pages 129-138, June.
    34. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
    35. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
    36. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.
    37. Raymond Deneckere & Carl Davidson, 1985. "Incentives to Form Coalitions with Bertrand Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 473-486, Winter.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Climate Change; Mitigation-Adaptation Game; Public Good Agreements; Strategic Substitutes versus Complements;

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fae:wpaper:2016.17. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mireille Chiroleu-Assouline). General contact details of provider: http://edirc.repec.org/data/faereea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.