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Vol. 55, No. 1, pp. 26-37 (2004)

“International Negotiations for Abatement of Global Warming -Game Theoretic Analyses-”
Koichi Tadenuma (Graduate School of Economics, Hitotsubashi University)

This paper examines efficiency and stability of the outcomes of international negotiations for abatement of global warming. Three cooperative game models due to Askako et. al. (1995), Okada(2003) and Tadenuma(2003) are considered, and the results and their implications are explained in detail. The main conclusions are as follows: (1) If each country has a welfare function that is quasi-linear in money, and monetary transfers between countries are possible, then the bargaining outcome is Pareto efficient; (2) In a negotiation about initial assignments of emission permits of greenhouse gases among countries, there is no outcome in the core, but the stable set exists; (3) In a negotiation about the total amount of emission permits under a given rule of initial assignments, the bargaing outcome is not necessarily Pareto efficient because each country rationally anticipates the effect of the total amonunt of emission permits on its own revenue or payment in the equilibrium of the emission permits market.