Climate games: Who's on first? What's on second?

Margaret Insley and Peter A. Forsyth
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Peter A. Forsyth: Cheriton School of Computer Science, University of Waterloo

No 1804, Working Papers from University of Waterloo, Department of Economics

Abstract: We study three different climate change games and compare with the outcome of choices by a Social Planner. In a dynamic setting, two players choose levels of carbon emissions. Rising atmospheric carbon stocks increase average global temperature which damages player utilities. Temperature is modeled as a stochastic differential equation. We contrast the results of a Stackelberg game with a game in which both players as leaders (a Leader-Leader or Trumpian game). We also examine a game, called an Interleaved game, where there is a significant time interval between player decisions. One or both players may be better off in these alternative games compared to the Stackelberg game, depending on state variables. We conclude that it is important to consider alternate game structures in examining strategic interactions in pollution games. We also demonstrate that the Stackelberg game is the limit of the Interleaved game as the time between decisions goes to zero.

JEL-codes: C61 C73 Q52 Q54 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2018-16-05, Revised 2018
New Economics Papers: this item is included in nep-ene, nep-env, nep-gth and nep-hpe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Climate games: Who’s on first? What’s on second? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:wat:wpaper:1804

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