Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations
The impact of climate change is widespread, affecting rich and poor countries and economies both large and small. Similarly, the study of climate change spans many disciplines, in both natural and social sciences. In environmental economics, leading methodologies include integrated assessment (IA) and game-theoretic modeling, which, despite their common premises, seldom intersect. In Strategic Bargaining and Cooperation in Greenhouse Gas Mitigations, Zili Yang connects these two important approaches by incorporating various game-theoretic solution concepts into a well-known integrated assessment model of climate change. This framework allows a more comprehensive analysis of cooperation and strategic interaction that can inform policy choices in greenhouse gas (GHG) mitigation.
Yang draws on a wide range of findings from IA and game theory to offer an analysis that is accessible to scholars in both fields. Yang constructs a cooperative game of stock externality provision—the economic abstraction of climate change—within the IA framework of the influential RICE model (developed by William D. Nordhaus and Zili Yang in 1996). The game connects the solution of an optimal control problem of stock externality provision with the bargaining of GHG mitigation quotas among the regions in the RICE model. Yang then compares the results of both game-theoretic and conventional solutions of the RICE model from incentive and strategic perspectives and, through numerical analysis of the simulation results, demonstrates the superiority of game- theoretic solutions. Yang also applies the game-theoretic solutions of RICE to such policy-related concerns as unexpected shocks in economic/climate systems and redistribution and transfer issues in GHG mitigation policies. Yang's innovative approach sheds new light on the behavioral aspects of IA modeling and provides game-theoretic modeling of climate change with a richer economic substance.
About the Author
Zili Yang is Professor of Economics at SUNY Binghamton.
"Zili Yang's book provides a clear explanation of important analytical tools that are crucial to understanding and analyzing a country's incentive to control climate change. The book illustrates how game theory can be used to quantify the benefits of cooperation and to identify the strategies that could be implemented to enhance the effectiveness of a climate treaty. Yang carefully describes innovative methodologies and their applications to the study of climate change policy. This book should be used by all students and researchers who believe that a careful analysis of participation incentives is crucial to comprehend the future evolution of climate policy regimes."
Carlo Carraro, Department of Economics, University of Venice
"Zili Yang has produced an impressive contribution to an under-studied but very important fieldthe strategic dimensions of climate change."
Charles D. Kolstad, Department of Economics and Bren School of Environmental Science & Management, University of California, Santa Barbara
"As a coauthor of RICE in 1996, Zili Yang is recognized as a pioneer in empirical multiregional climate modeling. One of the main virtues of his work is that it has allowed importing game-theoretic concepts in the economics and politics of climate science. In this book he presents the full background of the model, as well as extended developments since his early contribution. Thanks to the detailed presentation of his methodologies, the author definitely induces the reader to compare his results to other ones and thereby learn about fundamental aspects of how mankind might, or should, meet the challenge of climate change."
—Henry Tulkens, Professor of Economics and Public Finance, CORE, Universit