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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
Date of revision:
Handle: RePEc:fem:femwpa:2009.109
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  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  2. Hoel, M., 1989. "Global Environmental Problems: The Effects Of Unilateral Actions Taken By One Country," Memorandum 11/1989, Oslo University, Department of Economics.
  3. 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.
  4. 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.
  5. Chatterjee, Kalyan & Bhaskar Dutta & Debraj Ray & Kunal Sengupta, 1993. "A Noncooperative Theory of Coalitional Bargaining," Review of Economic Studies, Wiley Blackwell, vol. 60(2), pages 463-77, April.
  6. Hans-Peter Weikard & Michael Finus & Juan-Carlos Altamirano-Cabrera, 2006. "The impact of surplus sharing on the stability of international climate agreements," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 209-232, April.
  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. 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, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Energy, Transport and Environment.
  9. 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.
  10. 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.
  11. 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.
  12. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal Transfers and Participation Decisions in International Environmental Agreements," Working Papers 2006_44, Department of Economics, University of Venice "Ca' Foscari".
  13. CHANDER, Parkash & TULKENS, Henry, . "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).
  14. Santiago Rubio & Alistair Ulph, 2003. "An Infinite-Horizon Model of Dynamic Membership of International Environmental Agreements," Working Papers 2003.57, Fondazione Eni Enrico Mattei.
  15. Chander, P. & Tulkens, H., . "The core of an economy with multilateral environmental externalities," CORE Discussion Papers RP 1276, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  16. 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.
  17. de Zeeuw, Aart, 2008. "Dynamic effects on the stability of international environmental agreements," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 163-174, March.
  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. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
  20. repec:cor:louvrp:-1276 is not listed on IDEAS
  21. 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.
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