Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering When Countries are Asymmetric

47 Pages Posted: 10 Dec 2014

See all articles by Vassiliki Manoussi

Vassiliki Manoussi

Athens University of Economics and Business

Anastasios Xepapadeas

Athens University of Economics and Business; University of Bologna - School of Economics, Management, and Statistics

Date Written: December 9, 2014

Abstract

We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous regions or countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature. Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private benefits, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a trade-off actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in affecting incentives for cooperation or unilateral actions.

Keywords: Climate Change, Mitigation, Solar Radiation Management, Cooperation, Differential Game, Asymmetry, Feedback Nash Equilibrium

JEL Classification: Q53, Q54

Suggested Citation

Manoussi, Vassiliki and Xepapadeas, Anastasios, Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering When Countries are Asymmetric (December 9, 2014). FEEM Working Paper No. 101.2014, Available at SSRN: https://ssrn.com/abstract=2535720 or http://dx.doi.org/10.2139/ssrn.2535720

Vassiliki Manoussi (Contact Author)

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

Anastasios Xepapadeas

Athens University of Economics and Business ( email )

76 Patission Street
Athens, 104 34
Greece

University of Bologna - School of Economics, Management, and Statistics ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

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