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Time-Consistent Emission Reduction in a Dynamic Leader-Follower Game

  • Yulia Pavlova
Chapter
Part of the Annals of the International Society of Dynamic Games book series (AISDG, volume 11)

Abstract

IIn this paper, we search for multistage realization of international environmental agreements (IEAs). To analyze countries incentives and results of their interactions, we mathematically represent players’ strategic preferences and apply game-theoretic approach to make predictions about their outcomes. Initial decision on emission reduction is determined by the Stackelberg equilibrium concept. We generalize Barrett’s static ‘emission’ model to a dynamic framework and answer the question ‘how fast should the emission reduction be?’ It appears that sharper abatement is desirable in the early terms, which is similar to the conclusion of the Stern review. As discounting of the future payoffs becomes larger, more immediate reductions should be undertaken by the agreement parties. We show that without incentives from external organizations or governments, such depollution path can lead to a decline of the membership size.

Keywords

Emission Reduction Discount Factor International Environmental Agreement Stable Coalition Stackelberg Equilibrium 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

Acknowledgements

Funding from MTT Agrifood Research Finland and the COMAS Graduate School of the University of Jyväskylä is gratefully acknowledged.

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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.Economic Research, MTT Agrifood Research FinlandHelsinkiFinland

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