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Simulating a Sequential Coalition Formation Process for the Climate Change Problem: First Come, but Second Served?

  • Michael Finus

    (University of Stirling)

  • Bianca Rundshagen

    (University of Hagen)

  • Johan Eyckmans

    (atholieke Universiteit Leuven, Centrum voor Economische Studiën and Hogeschool-Universiteit Brussels)

We analyze stability of self-enforcing climate agreements based on a data set generated by the CLIMNEG world simulation model (CWSM), version 1.2. We consider two new aspects which appear important in actual treaty-making. First, we consider a sequential coalition formation process where players can make proposals which are either accepted or countered by other proposals. Second, we analyze whether a moderator, like an international organization, even without enforcement power, can improve upon globally suboptimal outcomes through coordinating actions by making recommendations that must be Pareto-improving to all parties. We discuss the conceptual difficulties of implementing our algorithm.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.109.

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Date of creation: Dec 2009
Handle: RePEc:fem:femwpa:2009.109
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  1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  2. Eyckmans, Johan & Tulkens, Henry, 2003. "Simulating coalitionally stable burden sharing agreements for the climate change problem," Resource and Energy Economics, Elsevier, vol. 25(4), pages 299-327, October.
  3. 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.
  4. Rubio, S. J. & Ulph, A., 2002. "An infinite-horizon model of dynamic membership of international environmental agreements," Discussion Paper Series In Economics And Econometrics 0210, Economics Division, School of Social Sciences, University of Southampton.
  5. Debraj Ray & Rajiv Vohra, 2001. "Coalitional Power and Public Goods," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1355-1384, December.
  6. Chander, Parkash & Tulkens, Henry, 1994. "The Core of an Economy With Multilateral Environmental Externalities," Working Papers 886, California Institute of Technology, Division of the Humanities and Social Sciences.
  7. Finus, Michael, 2008. "Game Theoretic Research on the Design of International Environmental Agreements: Insights, Critical Remarks, and Future Challenges," International Review of Environmental and Resource Economics, now publishers, vol. 2(1), pages 29-67, June.
  8. Hans-Peter Weikard & Juan-Carlos Altamirano-Cabrera & Michael Finus, 2004. "The Impact of Surplus Sharing on The Stability of International Climate Agreements," Working Papers 2004.99, Fondazione Eni Enrico Mattei.
  9. Bloch, Francis, 1996. "Sequential Formation of Coalitions in Games with Externalities and Fixed Payoff Division," Games and Economic Behavior, Elsevier, vol. 14(1), pages 90-123, May.
  10. repec:cor:louvrp:-1276 is not listed on IDEAS
  11. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
  12. Carraro, Carlo & Siniscalco, Domenico, 1991. "Strategies for the International Protection of the Environment," CEPR Discussion Papers 568, C.E.P.R. Discussion Papers.
  13. Hoel, M., 1989. "Global Environmental Problems: The Effects Of Unilateral Actions Taken By One Country," Memorandum 11/1989, Oslo University, Department of Economics.
  14. Francesco Bosello & Barbara Buchner & Carlo Carraro, 2003. "Equity, Development, and Climate Change Control," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 601-611, 04/05.
  15. Aart de Zeeuw, 2005. "Dynamic Effects on the Stability of International Environmental Agreements," Working Papers 2005.41, Fondazione Eni Enrico Mattei.
  16. Finus, Michael & Sáiz, M. Elena & Hendrix, Eligius M.T., 2009. "An empirical test of new developments in coalition theory for the design of international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 14(01), pages 117-137, February.
  17. CHANDER, Parkash & TULKENS, Henry, "undated". "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," CORE Discussion Papers RP 983, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  18. Michael Finus & Bianca Rundshagen, 2005. "Participation in International Environmental Agreements: The Role of Timing and Regulation," Working Papers 2005.45, Fondazione Eni Enrico Mattei.
  19. Johan Eyckmans & Michael Finus, 2003. "Coalition Formation in a Global Warming Game: How the Design of Protocols Affects the Success of Environmental Treaty-Making," Energy, Transport and Environment Working Papers Series ete0317, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
  20. Kalyan Chatterjee & Bhaskar Dutta & Debraj Ray & Kunal Sengupta, 1993. "A Noncooperative Theory of Coalitional Bargaining," Review of Economic Studies, Oxford University Press, vol. 60(2), pages 463-477.
  21. Michael Finus & Bianca Rundshagen, 2006. "A Micro Foundation of Core Stability in Positive-Externality Coalition Games," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(2), pages 329-346, June.
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