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Pareto-efficient climate agreements

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Abstract

Recent contributions show that climate agreements with broad participation can be implemented as weakly renegotiation-proof equilibria in simple models of greenhouse gas abatement where each country has a binary choice between cooperating (i.e., abate emissions) or defecting (no abatement). Here we show that this result carries over to a model where countries have a continuum of emission choices. Indeed, a Pareto-efficient climate agreement can always be implemented as a weakly renegotiation-proof equilibrium, for a sufficiently high discount factor. This means that one need not trade-off a "narrow but deep" treaty with a "broad but shallow" treaty.

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  • Geir B. Asheim & Bjart Holtsmark, 2007. "Pareto-efficient climate agreements," Discussion Papers 505, Statistics Norway, Research Department.
    • Handle: RePEc:ssb:dispap:505
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    File URL: https://www.ssb.no/a/publikasjoner/pdf/DP/dp505.pdf
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    More about this item

    Keywords

    Climate; non-cooperative game-theory; repeated games; weakly renegotiation-proof agreements;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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