TY - JOUR

T1 - Games of climate change with international trade

AU - Kemfert, Claudia

AU - Lise, Wietze

AU - Tol, Richard S.J.

PY - 2004/6/1

Y1 - 2004/6/1

N2 - We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries' emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications, optimal emission reduction is unaffected by trade. We therefore specify the model further, calibrating it to larger models that estimate the costs of emission reduction, trade effects, and impacts of climate change. If trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects. If trade effects are determined by relative emission reduction efforts in other countries, cooperation becomes easier. Carbon leakage does not affect our qualitative insights, although it does change the numbers.

AB - We analyse games of greenhouse gas emission reduction in which the emissions and the emission reduction costs of one country depend on other countries' emission abatement. In an analytically tractable model, we show that international trade effects on costs and emissions can either increase or decrease incentives to reduce emissions and to cooperate on emission abatement; in some specifications, optimal emission reduction is unaffected by trade. We therefore specify the model further, calibrating it to larger models that estimate the costs of emission reduction, trade effects, and impacts of climate change. If trade effects are driven by total emission reduction costs of other countries cooperation is slightly more difficult than in the case without trade effects. If trade effects are determined by relative emission reduction efforts in other countries, cooperation becomes easier. Carbon leakage does not affect our qualitative insights, although it does change the numbers.

KW - carbon leakage

KW - climate change

KW - coalition formation

KW - greenhouse gas emission reduction

KW - international trade

KW - optimal emission control

KW - Economics

UR - http://www.scopus.com/inward/record.url?scp=4043090756&partnerID=8YFLogxK

U2 - 10.1023/B:EARE.0000029920.33102.10

DO - 10.1023/B:EARE.0000029920.33102.10

M3 - Journal articles

AN - SCOPUS:4043090756

VL - 28

SP - 209

EP - 232

JO - Environmental and Resource Economics

JF - Environmental and Resource Economics

SN - 0924-6460

IS - 2

ER -