Climate Coalitions: A Theoretical and Computational Appraisal

26 Pages Posted: 11 Mar 2007

See all articles by Thierry Bréchet

Thierry Bréchet

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

François Gerard

Center for Operations Research and Econometrics (CORE)

Henry Tulkens

Catholic University of Louvain - Center for Operations Research and Econometrics (CORE)

Date Written: February 2007

Abstract

Using an updated version of the CWS model (introduced by Eyckmans and Tulkens in Resource and Energy Economics 2003), this paper intends to evaluate with numbers the respective merits of two competing notions of coalition stability in the standard global public goods model as customarily applied to the climate change problem. After a reminder of the model structure and of the definition of the two game theoretical stability notions involved - namely, core stability and internal-external stability, the former property is shown to hold for the grand coalition in the CWS model only if resource transfers of a specific form between countries are introduced. It is further shown that while the latter property holds neither for the grand coalition nor for most large coalitions, it is nevertheless verified in a weak sense that involves transfers (dubbed "potential internal stability") for most small coalitions. The reason for this difference is brought to light, namely the differing rationale that inspires the transfers in either case. Finally, it is shown that the stable coalitions that perform best (in terms of carbon concentration and global welfare) are always composed of both industrialized and developing countries. Two sensitivity analyses confirm the robustness of all these results.

Keywords: Climate Change, Coalitions, Simulation, Integrated Assessment

JEL Classification: C71, C73, D9, D62, F42, Q2

Suggested Citation

Brechet, Thierry and Gerard, François and Tulkens, Henry, Climate Coalitions: A Theoretical and Computational Appraisal (February 2007). FEEM Working Paper No. 21.2007, Available at SSRN: https://ssrn.com/abstract=968414 or http://dx.doi.org/10.2139/ssrn.968414

Thierry Brechet (Contact Author)

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

François Gerard

Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Henry Tulkens

Catholic University of Louvain - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium
+32 10 47 43 21 (Phone)
+32 10 47 43 01 (Fax)

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