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The Stability and Effectiveness of Climate Coalitions: A Comparative Analysis of Multiple Integrated Assessment Models

Author

Listed:
  • Kai Lessmann

    (Potsdam Institute for Climate Impact Research (PIK))

  • Ulrike Kornek

    (Potsdam Institute for Climate Impact Research (PIK))

  • Valentina Bosetti

    (Università Bocconi and Fondazione Eni Enrico Mattei (FEEM))

  • Rob Dellink

    (Environmental Economics and Natural Resources Group, Department of Economics, Wageningen University)

  • Johannes Emmerling

    (Fondazione Eni Enrico Mattei (FEEM) and Centro Euro-Mediterraneo sui Cambiamenti Climatici (CMCC))

  • Johan Eyckmans

    (KU Leuven – Center for Economics and Corporate Sustainability (CEDON))

  • Miyuki Nagashima

    (Research Institute of Innovative Technology for the Earth)

  • Hans-Peter Weikard

    (Environmental Economics and Natural Resources Group, Department of Economics, Wageningen University)

  • Zili Yang

    (Department of Economics, State University of New York at Binghamton)

Abstract

In this paper we report results from a comparison of numerically calibrated game theoretic integrated assessment models that explore stability and performance of international coalitions for climate change mitigation. Specifically, by means of this ensemble of models we are able to identify robust results concerning incentives of nations to commit themselves to a climate agreement, and to estimate what stable agreements can achieve in terms of greenhouse gas mitigation. We also assess the potential of transfers that redistribute the surplus of cooperation in order to foster stability of climate coalitions. In contrast to much of the existing analytical game theoretical literature, we find substantial scope for self-enforcing climate coalitions in most models that close much of the abatement and welfare gap between complete absence of cooperation and full cooperation. This more positive message follows from the use of transfer schemes that are designed to counteract free riding incentives.

Suggested Citation

  • Kai Lessmann & Ulrike Kornek & Valentina Bosetti & Rob Dellink & Johannes Emmerling & Johan Eyckmans & Miyuki Nagashima & Hans-Peter Weikard & Zili Yang, 2014. "The Stability and Effectiveness of Climate Coalitions: A Comparative Analysis of Multiple Integrated Assessment Models," Working Papers 2014.05, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2014.05
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    References listed on IDEAS

    as
    1. Zili Yang, 2008. "Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations: An Integrated Assessment Modeling Approach," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262240548, February.
    2. 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.
    3. Carlo Carraro & Johan Eyckmans & Michael Finus, 2006. "Optimal transfers and participation decisions in international environmental agreements," The Review of International Organizations, Springer, vol. 1(4), pages 379-396, December.
    4. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    5. 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.
    6. Hans‐Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
    7. Eyckmans, Johan & Finus, Michael & Mallozzi, Lina, 2011. "A New Class of Welfare Maximizing Stable Sharing Rules for Partition Function Games with Externalities," Working Papers 2011/08, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    8. Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
    9. Juan-Carlos Altamirano-Cabrera & Michael Finus, 2006. "Permit trading and stability of international climate agreements," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 19-48, May.
    10. Valentina Bosetti & Enrica De Cian, 2013. "A Good Opening: The Key to Make the Most of Unilateral Climate Action," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 255-276, October.
    11. Nordhaus, William D & Yang, Zili, 1996. "A Regional Dynamic General-Equilibrium Model of Alternative Climate-Change Strategies," American Economic Review, American Economic Association, vol. 86(4), pages 741-765, September.
    12. Fuentes-Albero, Cristina & Rubio, Santiago J., 2010. "Can international environmental cooperation be bought?," European Journal of Operational Research, Elsevier, vol. 202(1), pages 255-264, April.
    13. 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.
    14. Lessmann, Kai & Edenhofer, Ottmar, 2011. "Research cooperation and international standards in a model of coalition stability," Resource and Energy Economics, Elsevier, vol. 33(1), pages 36-54, January.
    15. Johan Eyckmans & Michael Finus, 2007. "Measures to enhance the success of global climate treaties," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 7(1), pages 73-97, March.
    16. Lessmann, Kai & Marschinski, Robert & Edenhofer, Ottmar, 2009. "The effects of tariffs on coalition formation in a dynamic global warming game," Economic Modelling, Elsevier, vol. 26(3), pages 641-649, May.
    17. 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.
    18. Valentina Bosetti, Carlo Carraro, Marzio Galeotti, Emanuele Massetti, Massimo Tavoni, 2006. "A World induced Technical Change Hybrid Model," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 13-38.
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    Cited by:

    1. Acocella, Nicola & Di Giovanni, Tomasz, 2019. "Natural Resources and Environment Preservation: Strategic Substitutability vs. Complementarity in Global and Local Public Good Provision," International Review of Environmental and Resource Economics, now publishers, vol. 13(3-4), pages 203-227, September.
    2. Eric Bahel, 2018. "Cooperation and Subgame Perfect Equilibria in Global Pollution Problems with Critical Threshold," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 70(2), pages 457-481, June.
    3. Zili Yang, 2016. "Mitigation Cost And Climate Damage Versus Incentive Shifts Of Climate Coalition," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 1-24, November.
    4. Jasper N. Meya & Ulrike Kornek & Kai Lessmann, 2018. "How empirical uncertainties influence the stability of climate coalitions," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 18(2), pages 175-198, April.
    5. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," CORE Discussion Papers 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Alban Thomas & Vera Zaporozhets, 2017. "Bargaining Over Environmental Budgets: A Political Economy Model with Application to French Water Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 227-248, October.

    More about this item

    Keywords

    Coalition Stability; International Environmental Agreements; Numerical modeling; Transfers;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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