The benefits of international cooperation under climate uncertainty: a dynamic game analysis

Xiao-Bing Zhang and Magnus Hennlock

Environment and Development Economics, 2018, vol. 23, issue 4, 452-477

Abstract: This paper investigates the benefits of international cooperation under uncertainty about global warming through a stochastic dynamic game. We analyze the benefits of cooperation both for the case of symmetric and asymmetric players. It is shown that the players’ combined expected payoffs decrease as climate uncertainty becomes larger, whether or not they cooperate. However, the benefits from cooperation increase with climate uncertainty. In other words, it is more important to cooperate when facing higher uncertainty. At the same time, more transfers will be needed to ensure stable cooperation among asymmetric players.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:cup:endeec:v:23:y:2018:i:04:p:452-477_00

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