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The CO2 Abatement Game: Costs, Incentives and the Stability of a Sub-Global Coalition


  • Mustafa Babiker

    (University of Colorado at Boulder)


This paper studies the economic incentives and the institutional issues governing the outcomes of a short-term climate change policy package guided by the United Nations' Framework Convention on Climate Change and the Berlin Mandate initiatives. Game theoretic tools and the global trade-environment interface are explored within a 26-region, 13- commodity computable general equilibrium framework to characterize the incentives of OECD regions to comply with a non-binding agreement in a carbon abatement coalition. The results have shown that the achievement of such a coalition as well as its expansion by means of self-financed schemes are possible if suitable trade instruments are designed.

Suggested Citation

  • Mustafa Babiker, 1998. "The CO2 Abatement Game: Costs, Incentives and the Stability of a Sub-Global Coalition," Computational Economics 9807002, EconWPA.
  • Handle: RePEc:wpa:wuwpco:9807002
    Note: Type of Document - pdf; prepared on IBM PC - PC-TEX/UNIX Sparc TeX; to print on HP/PostScript/Franciscan monk; pages: 55 ; figures: included. This work has one the Society of Computational Economics' contest for graduate student paper 1998

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    References listed on IDEAS

    1. Chichilnisky, Graciela & Heal, Geoffrey, 1994. "Who should abate carbon emissions? : An international viewpoint," Economics Letters, Elsevier, vol. 44(4), pages 443-449, April.
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    3. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
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    7. Larsen, Bjorn & Shah, Anwar, 1994. "Global Tradeable Carbon Permits, Participation Incentives, and Transfers," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 841-856, Supplemen.
    8. Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
    9. William D. Nordhaus, 1993. "Reflections on the Economics of Climate Change," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 11-25, Fall.
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    13. Piggott, John & Whalley, John & Wigle, Randall, 1993. "How large are the incentives to join subglobal carbon-reduction initiatives?," Journal of Policy Modeling, Elsevier, vol. 15(5-6), pages 473-490.
    14. John Whalley & Randall Wigle, 1991. "Cutting CO2 Emissions: The Effects of Alternative Policy Approaches," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 109-124.
    15. Khalid Nainar, S. M., 1989. "Bootstrapping for consistent standard errors for translog price elasticities : Some evidence from industrial electricity demand," Energy Economics, Elsevier, vol. 11(4), pages 319-322, October.
    16. B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
    17. Alan Manne & Richard Richels, 1992. "Buying Greenhouse Insurance: The Economic Costs of CO2 Emission Limits," MIT Press Books, The MIT Press, edition 1, volume 1, number 026213280x, January.
    18. Whalley, John, 1991. "The Interface between Environmental and Trade Policies," Economic Journal, Royal Economic Society, vol. 101(405), pages 180-189, March.
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    More about this item


    CGE Abatement CO2 coalition subgame connected-game;

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs

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