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CLIMATE CLUBS VERSUS SINGLE COALITIONS: THE AMBITION OF INTERNATIONAL ENVIRONMENTAL AGREEMENTS

Achim Hagen () and Klaus Eisenack ()

Climate Change Economics (CCE), 2019, vol. 10, issue 03, 1-19

Abstract: We investigate whether global cooperation on emissions abatement can be improved if asymmetric countries agree to sign one out of several environmental agreements. The analysis is based on a two-stage game theoretical model. Conditions for stable coalitions and the resulting global emissions are determined. We allow for multiple coalitions with all countries being different, and analyze the effects in the cases of increasing marginal damages from emissions and of decreasing marginal benefits of emissions. We find that in the case of decreasing marginal benefits and constant marginal damages, admitting multiple coalitions increases the number of cooperating countries and reduces emissions (compared to the standard case with a single coalition). For increasing marginal damages and constant marginal benefits, however, multiple stable coalitions cannot coexist. If both damages and benefits are nonlinear, admitting multiple coalitions can decrease emissions. The paper thus contributes to the emerging discussion on the scope and limits of climate clubs.

Keywords: Coalition formation; public goods; asymmetric countries; international environmental agreements; multiple coalitions; simultaneous move game (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1142/S2010007819500118

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