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A Two-Level Dynamic Game of Carbon Emissions Trading Between Russia, China, and Annex B Countries

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Listed:
  • Bernard, A.
  • Haurie, A.
  • Vielle, M.
  • Viguier, L.

Abstract

This paper proposes a computable dynamic game model of the strategic competition between Russia and developing countries (DCs), mainly represented by China, on the international market of emissions permits created by the Kyoto protocol. The model uses a formulation of a demand function for permits from Annex B countries and of marginal abatement costs (MAC) in Russia and China provided by two detailed models. GEMINI-E3 is a computable general equilibrium model that provides the data to estimate Annex B demand for permits and MACs in Russia. POLES is a partial equilibrium model that is used to obtain MAC curves for China. The competitive scenario is compared with a monopoly situation where only Russia is allowed to play strategically. The impact of allowing DCs to intervene on the international emissions trading market is thus assessed.

Suggested Citation

  • Bernard, A. & Haurie, A. & Vielle, M. & Viguier, L., 2003. "A Two-Level Dynamic Game of Carbon Emissions Trading Between Russia, China, and Annex B Countries," Conference papers 331073, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331073
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    17. Wu, Pei-Ing & Chen, Chai Tzu & Cheng, Pei-Ching & Liou, Je-Liang, 2014. "Climate game analyses for CO2 emission trading among various world organizations," Economic Modelling, Elsevier, vol. 36(C), pages 441-446.
    18. Zhu, Y. & Li, Y.P. & Huang, G.H., 2013. "Planning carbon emission trading for Beijing's electric power systems under dual uncertainties," Renewable and Sustainable Energy Reviews, Elsevier, vol. 23(C), pages 113-128.
    19. S. Du & F. Ma & Z. Fu & L. Zhu & J. Zhang, 2015. "Game-theoretic analysis for an emission-dependent supply chain in a ‘cap-and-trade’ system," Annals of Operations Research, Springer, vol. 228(1), pages 135-149, May.
    20. Sean B. Walker & Keith W. Hipel, 2017. "Strategy, Complexity and Cooperation: The Sino-American Climate Regime," Group Decision and Negotiation, Springer, vol. 26(5), pages 997-1027, September.
    21. Jiang, Jingjing & Xie, Dejun & Ye, Bin & Shen, Bo & Chen, Zhanming, 2016. "Research on China’s cap-and-trade carbon emission trading scheme: Overview and outlook," Applied Energy, Elsevier, vol. 178(C), pages 902-917.
    22. Jiang, Hong-Dian & Purohit, Pallav & Liang, Qiao-Mei & Dong, Kangyin & Liu, Li-Jing, 2022. "The cost-benefit comparisons of China's and India's NDCs based on carbon marginal abatement cost curves," Energy Economics, Elsevier, vol. 109(C).

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