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Luring others into climate action: coalition formation games with threshold and spillover effects

Valentina Bosetti (), Mélanie Heugues () and Alessandro Tavoni

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We explore the prospects of cooperation in a threshold public bad game. The experiment’s setup allows us to investigate the issue of effort coordination between signatories and non-signatories to a climate agreement under the threat of a catastrophe. Motivated actors may signal willingness to lead by committing a share of investments to a ‘clean’ but less remunerative project. The game is parametrized such that the externality cannot be fully internalized by the coalition, so that some effort on the part of the second movers is required if the catastrophic losses are to be avoided. We manipulate both the relative returns of two investments and the extent to which the gains from leadership diffuse to second movers. We find that the likelihood of reaching a sizeable coalition of early investors in the clean technology is higher when the benefits are appropriated by the coalition. Conversely, spillovers can entice second movers’ adoption.

JEL-codes: C70 C92 Q50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-ene, nep-env, nep-exp and nep-gth
Date: 2017-04-01
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Published in Oxford Economic Papers, 1, April, 2017, 69(2), pp. 410-431. ISSN: 0030-7653

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http://eprints.lse.ac.uk/68931/ Open access version. (application/pdf)

Related works:
Journal Article: Luring others into climate action: coalition formation games with threshold and spillover effects (2017) Downloads
Working Paper: Luring Others into Climate Action: Coalition Formation Games with Threshold and Spillover Effects (2015) Downloads
Working Paper: Luring Others into Climate Action: Coalition Formation Games with Threshold and Spillover Effects (2015) Downloads
Working Paper: Luring others into climate action: Coalition formation games with threshold and spillover effects (2015) Downloads
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