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Climate Policy Commitment Devices

Author

Listed:
  • Sebastian Dengler

    (Tilburg University)

  • Reyer Gerlagh

    (Tilburg University and CREE - Oslo Centre for Research on Environmentally friendly Energy)

  • Stefan T. Trautmann

    (Tilburg University and University of Heidelberg)

  • Gijs van de Kuilen

    (Tilburg University)

Abstract

We develop a dynamic resource extraction game that mimics the global multi-generation planning problem for climate change and fossil fuel extraction. We implement the game under different conditions in the laboratory. Compared to a ‘libertarian’ baseline condition, we find that policy interventions that provide a costly commitment device or reduce climate threshold uncertainty reduce resource extraction. We also study two conditions to assess the underlying social preferences and the viability of ecological dictatorship. Our results suggest that climate-change policies that focus on investments that lock the economy into carbon-free energy sources provide an important commitment device in the intertemporal cooperation problem.

Suggested Citation

  • Sebastian Dengler & Reyer Gerlagh & Stefan T. Trautmann & Gijs van de Kuilen, 2017. "Climate Policy Commitment Devices," Working Papers 2017.49, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2017.49
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    More about this item

    Keywords

    Climate Policy Instruments; Intertemporal Cooperation; Climate Game; Experiments;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D99 - Microeconomics - - Micro-Based Behavioral Economics - - - Other
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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