Evolution in time of Farsightedly Stable Coalitions: An Application of FUND

Dritan Osmani () and Richard S.J. Tol ()

No FNU-162, Working Papers from Research unit Sustainability and Global Change, Hamburg University

Abstract: Game theory is used to analyze the formation and stability of coalitions for environmental protection. The paper extends further our previous research on farsightedly stable coalitions and preferred farsightedly stable coalitions (Osmani & Tol 2007a). The integrated assessment model FUND provides data for di®erent time horizons as well as the cost-bene¯t function of pollution abatement. This allows for analysis of the evolution in time of farsightedly stable coalitions and their improvement to environment and welfare. Considering multiple farsightedly stable coalitions, the participation in coalitions for environmental protection is signi¯cantly increased, which is a positive result of our game theoretical approach. But the farsighted behavior can not be sustained for a long term which implies that we can not have big coalitions for environmental protection even in "a farsighted world".

Keywords: game theory; integrated assessment modeling; farsighted stability; coalition formation (search for similar items in EconPapers)
JEL-codes: C02 C72 H41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-gth
Date: Written 2008-05
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