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2020 | OriginalPaper | Buchkapitel

Sustainable International Cooperation with Ancillary Benefits of Climate Policy

verfasst von : Nobuyuki Takashima

Erschienen in: Ancillary Benefits of Climate Policy

Verlag: Springer International Publishing

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Abstract

This study aims to increase the long-term feasibility of international environmental agreements (IEAs) between asymmetric countries via a repeated game model by considering the effect of the ancillary benefits of climate policy. Generally, climate change mitigation generates not only primary public benefits, but also ancillary benefits. This study supposes that all countries have two-sided asymmetry: the public and ancillary benefits and cost parameters, which are high and low, respectively. The IEA model with a repeated game considers that a strategy dictates participating countries’ actions. Consequently, ancillary benefits affect the conditions under which participants cooperate in line with the strategy. Moreover, we find the minimum number of participating countries that needs to be satisfied before the agreement starts by considering the method for the selection of the countries that punish a deviator from the agreement between two types of countries so that our strategy is always effective. Additionally, the findings show that there is a possibility that ancillary benefits relax the condition of minimum participation. The results suggest that participating countries should recognize the effect of ancillary benefits when they negotiate on climate change mitigation.

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Vorheriges Kapitel Technological Transition and Carbon Constraints Under Uncertainty

Nächstes Kapitel Impure Public Good Models as a Tool to Analyze the Provision of Ancillary and Primary Benefits

Nur mit Berechtigung zugänglich

For more details, see the website of UNFCCC. URL: https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement

Rive and Rübbelke (2010) and Rübbelke (2003) elucidate the difference between primary and ancillary (secondary) benefits of climate change mitigation.

They also perform simulations to assess the effects of CDM subsidy rates on welfare, poverty, and air quality in China.

As described in Asheim et al. (2006) and Hovi et al. (2015), to analyze an IEA’s formation, two theoretical models are generally employed: one is called as a one-shot game model and the other is a repeated game model.

Rive and Rübbelke (2010) introduce the difference in the “co-benefit rate” of GHG abatement between developed and developing countries. This can be considered the asymmetry in ancillary benefits in our model.

In other words, the slope of the benefit function when a country cooperates is steeper than or equal to the slope of the benefit function when the country defects.

In Froyn and Hovi (2008), when δ is close (but not equal) to 1, the number of punishing countries for a WRP equilibrium is decided as [c − d − (d − b)(n − 1)]/b < m ≤ [c − (d − b)n]/b. Moreover, when d = b in this condition, we have (c − b)/b < m ≤ c/b.

For this implicit assumption, see Hovi et al. (2015). Similarly, Asheim et al. (2006) assume that countries agree in the first period of the contract. Generally, the strategies in a repeated game model implicitly make this kind of assumption. For example, see Asheim et al. (2006), Asheim and Holtsmark (2009), Barrett (1999, 2002, 2003), Froyn and Hovi (2008), and Takashima (2017a, b, 2018).

As mentioned in Takashima (2018), it is sufficient to consider a potential renegotiation by the whole group or sub-groups of punishing countries for the reason that in our model the incentives for renegotiation depend on the number of punishing countries. This incentive can be different between type 1 and type 2 punishing countries. For additional detail, see Lemma 2.

Takashima (2018) implicitly assumes that the punishing countries are randomly selected.

In the theory of repeated games with a discount factor, because a player cannot gain by multiple period deviations if he/she cannot gain by a one-period deviation (Abreu 1988, p. 390), we need only check that no player can gain by a one-period deviation from the strategy after any history.

When γ ₂ − α ₂ < γ ₁ − α ₁ (γ ₁ − α ₁ < γ ₂ − α ₂), the number of punishing countries, m ^∗ (m ^∗∗), decreases discontinuously while α ₁ (α ₂) increases continuously, leading to a jump in equilibrium.

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Titel: Sustainable International Cooperation with Ancillary Benefits of Climate Policy
verfasst von: Nobuyuki Takashima
Verlag: Springer International Publishing
Buch: Ancillary Benefits of Climate Policy
Print ISBN: 978-3-030-30977-0

Electronic ISBN: 978-3-030-30978-7

Copyright-Jahr: 2020
DOI: https://doi.org/10.1007/978-3-030-30978-7_5

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