Microeconomics Seminar 2016-2017
joint with the Département de sciences économiques, Université de Montréal
room C-6149 (U. de Montréal, Pavillon Lionel-Groulx, 3150, rue Jean-Brillant)
A standard result from the game theoretic literature on international environmental agreements is that coalitions are either “broad but shallow” or “narrow but deep”. Hence, the stable coalition size is small when the potential welfare gains are large. We modify a standard climate coalition game by adding a – seemingly – small but realistic feature: we allow countries to delay climate negotiations until the next “round” if a coalition forms but decides to remain inactive. It turns out that results are surprisingly different under this modification. In particular, a large coalition with deep emissions cuts forms if countries are sufficiently patient. Our results also indicate that countries should try hard to overcome coordination problems in the formation of a coalition. A more cooperative outcome may then be reached, and it may be reached more quickly.