A Coupled Constraint Game Model of International Climate Policy

This paper proposes a dynamic-game theoretic model for the international negotiations that should take place to agree on a global mitigation scheme when the real extent of climate change due to anthropogenic emissions is known. 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 total 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 evaluated through a Computable General Equilibrium (CGE) model. The equilibrium is computed by implementing an oracle-based optimization method using the implicit definition of the payoffs to the different players obtained in simulations performed with the global CGE model GEMINI-E3. The simulation runs and the manifold of equilibria obtained when the weighting of players varies are discussed and interpreted in economic terms.