A game of international climate policy solved by a homogeneous oracle-based method for variational inequalities

This paper presents a game-theoretic model for the international negotiations that should take place to renew or extend the Kyoto protocol beyond 2012. These negotiations should lead to a self-enforcing agreement on a burden sharing scheme to realize the necessary global emissions abatement that would preserve the world against irreversible ecological impacts. The model assumes a non-cooperative behavior of the parties except for the fact that they will be collectively committed to reach a target on cumulative emissions by the year 2050. The concept of normalized equilibrium, introduced by J.B. Rosen for concave games with coupled constraints, is used to characterize a family of dynamic equilibrium solutions in an m-player game where the agents are (groups of) countries and the payoffs are the welfare gains obtained from a Computable General Equilibrium (CGE) model. The model is solved using an homogeneous version of the oracle-based optimization engine (OBOE) permitting an implicit definition of the payoffs to the different players, obtained through simulations performed with the global CGE model GEMINI-E3.

Published in:
Annals of the International Society of Dynamic Games, 11, 5, 469-488

 Record created 2009-12-03, last modified 2018-01-28

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