Global Climate Games: How Pricing and a Green Fund Foster Cooperation
Peter Cramton and Steven Stoft
,
2
(
1
)
Economics of Energy & Environmental Policy
March
2012
Abstract
The most efficient global climate policy is to price carbon. The Kyoto-Copenhagen agenda was intended to do this with a system of international cap and trade. We view these negotiations as a game in which countries choose their quantity targets based on self interest. Like the analogous public-goods game, in which countries choose their abatement levels, we find this game leads to uncooperative behavior and suggest that this is why the Kyoto approach inevitably failed.