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Efficiency vs. Stability in Climate Coalitions: A Conceptual and Computational Appraisal

Thierry Bréchet, François Gerard and Henry Tulkens

Year: 2011
Volume: Volume 32
Number: Number 1
DOI: 10.5547/ISSN0195-6574-EJ-Vol32-No1-3
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Abstract:
This paper evaluates with numerical computations the respective merits of two competing notions of coalition stability in the standard global public goods model of climate change. To this effect it uses the CWS integrated assessment model. After a reminder of the two game theoretical stability notions involved--core-stability and internal-external stability--and of the CWS model, the former property is shown to hold for the grand coalition if resource transfers of a specific form between countries are introduced. The latter property appears to hold neither for the grand coalition nor for most large coalitions whereas it is verified for most small coalitions in a weak sense that involves transfers. Finally, coalitions, stable in either sense, that perform best in terms of carbon concentration and global welfare are always heterogeneous ones. Therefore, if coalitional stability is taken as an objective, promoting small or homogeneous coalitions is not to be recommended.



Climate Policies: A Burden, or a Gain?

Thierry Brechet and Henry Tulkens

Year: 2015
Volume: Volume 36
Number: Number 3
DOI: 10.5547/01956574.36.3.tbre
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Abstract:
That climate policies are costly is evident and therefore often create major fears. But the alternative (no action) also has a cost. Therefore, mitigation costs netted of the damage costs avoided are the only figure that can seriously be considered as the "genuine cost" of a policy. We elaborate on this view of a policy's cost by distinguishing between its "direct" cost component and its avoided damage cost component; we then confront the two so as to evaluate its genuine cost. As damages avoided are equivalent to the benefits generated, this brings climate policies naturally in the realm of benefit-cost analysis. However, the sheer benefit-cost criterion may not be a sufficient incentive for a country to be induced to cooperate internationally, a necessary condition for an effective global climate policy. We therefore also explore how to make use of this criterion in the context of international climate cooperation.





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