Cooperation and Competition in Climate Change Policies: Mitigation and Climate Engineering when Countries are Asymmetric

Abstract

We study a dynamic game of climate policy design in terms of emissions and solar radiation management (SRM) involving two heterogeneous regions or countries. Countries emit greenhouse gasses (GHGs), and can block incoming radiation by unilateral SRM activities, thus reducing global temperature.Heterogeneity is modelled in terms of the social cost of SRM, the environmental damages due to global warming, the productivity of emissions in terms of generating private bene…ts, the rate of impatience, and the private cost of geoengineering. We determine the impact of asymmetry on mitigation and SRM activities, concentration of GHGs, and global temperature, and we examine whether a tradeo¤ actually emerges between mitigation and SRM. Our results could provide some insights into a currently emerging debate regarding mitigation and SRM methods to control climate change, especially since asymmetries seem to play an important role in a¤ecting incentives for cooperation or unilateral actions.

Climate Change Issues in BRICS Countries

“…Recent study on the climate policy design in terms of emissions and solar radiation has suggested evaluating in terms of social cost and environmental changes. The impact of asymmetry on mitigation and solar radiation management has been found significant, and asymmetries play an important role in influencing incentives for cooperation and unilateral actions (Manoussi and Xepapadeas, 2017). Climate change in a political system of governance depends on national level public bureaucracies in order to formulate and implement effective and efficient measures.…”

STRATEGIC CONFLICTS ON THE HORIZON: R&D INCENTIVES FOR ENVIRONMENTAL TECHNOLOGIES

“…Second, CE deployment fits well into the public good structure: Deployment costs are borne by the deploying country alone while the effect of reduced GHG levels and temperatures is inevitably global. Finally, and central in this paper, countries differ in their assessment of an 'optimal climate' (Rosenzweig and Parry 1994;Porter et al 2014;Manoussi and Xepapadeas 2015;Heyen et al 2015); as a consequence, the assumption of heterogeneous preferences for deployment of the technology is particularly reasonable here.…”

“…Finally, this paper adds to the literature on the economics of CE with contributions focusing either on intergenerational heterogeneity (Goeschl et al 2013) or heterogeneity across countries (Moreno-Cruz 2010;Manoussi and Xepapadeas 2015). Most of these papers however are interested in the interplay of SRM with abatement from which the present study abstracts.…”

Climate Engineering in an Interconnected World: The Role of Tariffs

“…We develop a dynamic model of strategic interaction between two countries diverging in their perception of geoengineering and production possibilities. The model structure is similar to the asymmetric transboundary pollution game with a geoengineering option in Manoussi and Xepapadeas [14]. The difference is that we study a fully asymmetric trade game, in the sense of entirely different objectives for each country instead of different parameter values only.…”