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Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations: An Integrated Assessment Modeling Approach

Author

Listed:
  • Zili Yang

    (State University of New York at Binghamton)

Abstract

The impact of climate change is widespread, affecting rich and poor countries and economies both large and small. Similarly, the study of climate change spans many disciplines, in both natural and social sciences. In environmental economics, leading methodologies include integrated assessment (IA) and game theoretic modeling, which, despite their common premises, seldom intersect. In Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations, Zili Yang connects these two important approaches by incorporating various game theoretic solution concepts into a well-known integrated assessment model of climate change. This framework allows a more comprehensive analysis of cooperation and strategic interaction that can inform policy choices in greenhouse gas (GHG) mitigation. Yang draws on a wide range of findings from IA and game theory to offer an analysis that is accessible to scholars in both fields. Yang constructs a cooperative game of stock externality provision--the economic abstraction of climate change--within the IA framework of the influential RICE model (developed by William D. Nordhaus and Zili Yang in 1996). The game connects the solution of an optimal control problem of stock externality provision with the bargaining of GHG mitigation quotas among the regions in the RICE model. Yang then compares the results of both game theoretic and conventional solutions of the RICE model from incentive and strategic perspectives and, through numerical analysis of the simulation results, demonstrates the superiority of game theoretic solutions. Yang also applies the game theoretic solutions of RICE to such policy-related concerns as unexpected shocks in economic/climate systems and redistribution and transfer issues in GHG mitigation policies. Yang's innovative approach sheds new light on the behavioral aspects of IA modeling and provides game theoretic modeling of climate change with a richer economic substance.

Suggested Citation

  • Zili Yang, 2008. "Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations: An Integrated Assessment Modeling Approach," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262240548, December.
    • Handle: RePEc:mtp:titles:0262240548
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    Citations

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    Cited by:

    1. Lessmann, Kai & Kornek, Ulrike & Dellink, Rob & Emmerling, Johannes & Eyckmans, Johan & Nagashima, Miyuki & Weikard, Hans-Peter & Yang, Zili, 2014. "The Stability and Effectiveness of Climate Coalitions: A Comparative Analysis of Multiple Integrated Assessment Models," Climate Change and Sustainable Development 163598, Fondazione Eni Enrico Mattei (FEEM).
    2. Laurence Kotlikoff & Felix Kubler & Andrey Polbin & Jeffrey Sachs & Simon Scheidegger, 2021. "Making Carbon Taxation A Generational Win Win," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 3-46, February.
    3. Yang, Zili & Sirianni, Philip, 2010. "Balancing contemporary fairness and historical justice: A 'quasi-equitable' proposal for GHG mitigations," Energy Economics, Elsevier, vol. 32(5), pages 1121-1130, September.
    4. Henry Tulkens, 2016. "COP 21 and Economic Theory: Taking Stock," Revue d'économie politique, Dalloz, vol. 126(4), pages 471-486.
    5. Ye, Huiying & Liao, Hua & Zheng, Guoliang & Peng, Ying, 2024. "Industrialization, environmental externality, and climate mitigation strategies," Economic Modelling, Elsevier, vol. 139(C).
    6. Thierry Brechet & Henry Tulkens, 2015. "Climate Policies: A Burden, or a Gain?," The Energy Journal, , vol. 36(3), pages 155-170, July.
    7. Eriksson, Mathilda, 2020. "Afforestation and avoided deforestation in a multi-regional integrated assessment model," Ecological Economics, Elsevier, vol. 169(C).
    8. Rogna, Marco & Vogt, Carla J., 2021. "Accounting for inequality aversion can justify the 2° C goal," Ruhr Economic Papers 925, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Sareh Vosooghi & Maria Arvaniti & Rick van der Ploeg, 2022. "Self-Enforcing Climate Coalitions for Farsighted Countries: Integrated Analysis of Heterogeneous Countries," CESifo Working Paper Series 9768, CESifo.
    10. Thierry Bréchet & Carmen Camacho & Vladimir M. Veliov, 2012. "Adaptive Model-Predictive Climate Policies in a Multi-Country Setting," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00718659, HAL.
    11. Zhifu Mi & Hua Liao & D’Maris Coffman & Yi-Ming Wei, 2019. "Assessment of equity principles for international climate policy based on an integrated assessment model," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 95(1), pages 309-323, January.
    12. Thierry Bréchet & François Gerard & Henry Tulkens, 2011. "Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal," The Energy Journal, , vol. 32(1), pages 49-76, January.
    13. Zili Yang, 2017. "Likelihood of environmental coalitions and the number of coalition members: evidences from an IAM model," Annals of Operations Research, Springer, vol. 255(1), pages 9-28, August.
    14. Thierry Bréchet & Carmen Camacho & Vladimir Veliov, 2014. "Model predictive control, the economy, and the issue of global warming," Annals of Operations Research, Springer, vol. 220(1), pages 25-48, September.
    15. Zili Yang, 2016. "Mitigation Cost And Climate Damage Versus Incentive Shifts Of Climate Coalition," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 7(04), pages 1-24, November.
    16. Liao, Hua & Ye, Huiying, 2023. "Endogenous economic structure, climate change, and the optimal abatement path," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 417-429.
    17. Zhang, Kun & Yang, Zili & Liang, Qiao-Mei & Liao, Hua & Yu, Bi-Ying & Wei, Yi-Ming, 2023. "China's carbon emissions and energy demand under different methods of global mitigation cooperation: Application of an extended RICE model with energy details," Energy, Elsevier, vol. 285(C).
    18. KORNEK, Urik & LESSMANN, Kai & TULKENS, Henry, 2014. "Transferable and non transferable utility implementations of coalitional stability in integrated assessment models," LIDAM Discussion Papers CORE 2014035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    19. William Brock & Anastasios Xepapadeas, 2020. "Spatial Environmental and Resource Economics," DEOS Working Papers 2002, Athens University of Economics and Business.
    20. Kai Lessmann & Ulrike Kornek & Valentina Bosetti & Rob Dellink & Johannes Emmerling & Johan Eyckmans & Miyuki Nagashima & Hans-Peter Weikard & Zili Yang, 2015. "The Stability and Effectiveness of Climate Coalitions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 811-836, December.
    21. William Nordhaus, 2014. "Estimates of the Social Cost of Carbon: Concepts and Results from the DICE-2013R Model and Alternative Approaches," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 000.
    22. Nemanja Backović & Bojan Ilić & Jelena Andreja Radaković & Dušan Mitrović & Nemanja Milenković & Marko Ćirović & Zoran Rakićević & Nataša Petrović, 2024. "Towards 2050: Evaluating the Role of Energy Transformation for Sustainable Energy Growth in Serbia," Sustainability, MDPI, vol. 16(16), pages 1-22, August.
    23. Tulkens, Henry, 2016. "COP 21 and Economic Theory: Taking Stock," ET: Economic Theory 236237, Fondazione Eni Enrico Mattei (FEEM).
    24. Chen, Hao & Qi, Shaozhou & Zhang, Jihong, 2022. "Towards carbon neutrality with Chinese characteristics: From an integrated perspective of economic growth-equity-environment," Applied Energy, Elsevier, vol. 324(C).
    25. Cuicui Feng & Guanqiong Ye & Jiangning Zeng & Jian Zeng & Qutu Jiang & Liuyue He & Yaowen Zhang & Zhenci Xu, 2023. "Sustainably developing global blue carbon for climate change mitigation and economic benefits through international cooperation," Nature Communications, Nature, vol. 14(1), pages 1-10, December.

    More about this item

    Keywords

    climate change; integrated assessment; game theory;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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