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Climate agreements in a mitigation-adaptation game

Author

Listed:
  • Basak Bayramoglu

    (ECO-PUB - Economie Publique - INRA - Institut National de la Recherche Agronomique - AgroParisTech)

  • Michael Finus

    (Department of Economics - Brock University [Canada])

  • Jean-François Jacques

    (ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)

Abstract

We analyze the strategic interaction between mitigation (public good) and adaptation (private good) strategies in a climate agreement. We show the fear that adaptation will reduce the incentives to mitigate carbon emissions may be unwarranted. Adaptation can lead to larger self-enforcing agreements, associated with higher global mitigation levels and welfare if it causes mitigation levels between different countries to be no longer strategic substitutes but complements. We argue that our results extend to many public goods. The well-known problem of "easy riding" may turn into "easy matching" if the marginal utility of public good consumption is strongly influenced by private consumption.

Suggested Citation

  • Basak Bayramoglu & Michael Finus & Jean-François Jacques, 2018. "Climate agreements in a mitigation-adaptation game," Post-Print hal-01965776, HAL.
    • Handle: RePEc:hal:journl:hal-01965776
    DOI: 10.1016/j.jpubeco.2018.07.005
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    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

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