Games of Climate Change with International Trade

Claudia Kemfert, Wietze Lise and Richard Tol

Environmental & Resource Economics, 2004, vol. 28, issue 2, 209-232

Abstract: We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries' emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications, optimal emission reduction is unaffected by trade. We therefore specify the model further, calibrating it to larger models that estimate the costs of emission reduction, trade effects, and impacts of climate change. If trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects. If trade effects are determined by relative emission reduction efforts in other countries, cooperation becomes easier. Carbon leakage does not affect our qualitative insights, although it does change the numbers. Copyright Kluwer Academic Publishers 2004

Keywords: carbon leakage; climate change; coalition formation; greenhouse gas emission reduction; international trade; optimal emission control (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (20)

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Working Paper: GAMES OF CLIMATE CHANGE WITH INTERNATIONAL TRADE (2001)
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DOI: 10.1023/B:EARE.0000029920.33102.10

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