Climate Change and Game Theory: A Mathematical Survey

CCEP Working Paper No. 2.10

41 Pages Posted: 19 Jul 2011

See all articles by Peter John Wood

Peter John Wood

Australian National University (ANU) - Crawford School of Economics and Government

Date Written: July 11, 2011

Abstract

This paper examines the problem of achieving global cooperation to reduce greenhouse gas emissions. Contributions to this problem are reviewed from noncooperative game theory, cooperative game theory, and implementation theory. We examine the solutions to games where players have a continuous choice about how much to pollute, and games where players make decisions about treaty participation. The implications of linking cooperation on climate change with cooperation on other issues, such as trade, is also examined. Cooperative and non-cooperative approaches to coalition formation are investigated in order to examine the behaviour of coalitions cooperating on climate change. One way to achieve cooperation is to design a game, known as a mechanism, whose equilibrium corresponds to an optimal outcome. This paper examines some mechanisms that are based on conditional commitments, and their policy implications. These mechanisms could make cooperation on climate change mitigation more likely.

Keywords: Climate change, negotiations, game theory, implementation theory

JEL Classification: Q54, C70

Suggested Citation

Wood, Peter John, Climate Change and Game Theory: A Mathematical Survey (July 11, 2011). CCEP Working Paper No. 2.10, Available at SSRN: https://ssrn.com/abstract=1883944 or http://dx.doi.org/10.2139/ssrn.1883944

Peter John Wood (Contact Author)

Australian National University (ANU) - Crawford School of Economics and Government ( email )

ANU College of Asia and the Pacific
J.G. Crawford Building, #132, Lennox Crossing
Canberra, Australian Capital Territory 0200
Australia

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