A Strategic Analysis of Global Warming: Theory and Some Numbers

35 Pages Posted: 13 Oct 2008

See all articles by Roy Radner

Roy Radner

Leonard N. Stern School of Business - Department of Economics

Prajit K. Dutta

Columbia University, Graduate School of Arts and Sciences, Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2005

Abstract

We model the global warming process as a dynamic commons game in which the players are countries, their actions at each date produceemissions of greenhouse gases, and the state variable is the current stock of greenhouse gases. The theoretical analysis is complemented by a calibration exercise. The first set of results establishes theoretically and then empirically the over-emissions due to a "tragedy of the commons." The power of simple sanctions to lower emissions and increase welfare is then examined as is the effect of cost asymmetry. Finally, a complete theoretical charactrization is provided for the best equilibrium and it is shown that it has a very simple structure; it involves a constant emission rate through time.

Keywords: Global Warming, Dynamic Games, Tragedy of the Common, Calibration

Suggested Citation

Radner, Roy and Dutta, Prajit K., A Strategic Analysis of Global Warming: Theory and Some Numbers (March 2005). NYU Working Paper No. 2451/26097, Available at SSRN: https://ssrn.com/abstract=1282528

Roy Radner (Contact Author)

Leonard N. Stern School of Business - Department of Economics ( email )

44 West Fourth Street, 7-180
New York, NY 10012
United States

Prajit K. Dutta

Columbia University, Graduate School of Arts and Sciences, Department of Economics ( email )

420 W. 118th Street
New York, NY 10027
United States

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