Pareto-Efficient Climate Agreements Can Always Be Renegotiation-Proof

Geir B. Asheim and Bjart Holtsmark

Memo 23/2008

Last ned memo

Recent contributions show that climate agreements with broad participation can be implemented as weakly renegotiation-proof equilibria in simple models of greenhouse gas abatement where each country has a binary choice between cooperating (i.e., abate emissions) or defecting (no abatement). Here we show that this result carries over to a model where countries have a continuum of emission choices. Indeed, a Pareto-efficient climate agreement can always be implemented as a weakly renegotiation-proof equilibrium, for a sufficiently high discount factor. This means that one need not trade-off a “narrow but deep” treaty with a “broad but shallow” treaty.

Published June 20, 2014 10:21 AM - Last modified Jan. 24, 2019 11:43 AM