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AbstractThis paper analyses the effects of altruism on the formation of climate coalitions in the standard two-stage game of self-enforcing international environmental agreements with identical countries. Altruism implies that each country values, to some extent, every other country's welfare when deciding on its coalition membership and emissions policy. In the Nash [Stackelberg] game, the fringe [coalition] countries exploit the altruism of the coalition [fringe] countries so that altruism decreases [increases] the coalition size. In any case, global emissions and global welfare are close to the non-cooperative values. However, altruism narrows the gap between the individually optimal emissions and the socially optimal emissions, so altruism increases global welfare. The effects of altruism on the formation of climate coalitions crucially depends on its modelling: If altruism affects the membership decision but not the policy decision, or if each coalition country is more altruistic toward other coalition countries than toward fringe countries, altruism can stabilise large coalitions up to the grand coalition. Finally, altruism can stabilise small coalitions but destabilises large coalitions with asymmetric countries.

Synopse von "Unilateral Climate Policy: Harmful or even Disastrous?", "Unilateral Supply Side Policies and the Green Paradox", "Lobbying over Exhaustible-Resource Extraction" und "Special Interest Politics: Contribution Schedules versus Nash Bargaining" ; Synopsis of "Unilateral Climate Policy: Harmful or even Disastrous?", "Unilateral Supply Side Policies and the Green Paradox", "Lobbying over Exhaustible-Resource Extraction", and "Special Interest Politics: Contribution Schedules versus Nash Bargaining" ; vorgelegt von Mark Christopher Schopf ; Erstgutachter: Prof. Dr. Bernard Michael Gilroy, Zweitgutachter: Prof. Dr. Marco Runkel ; Bibliography Seite 127-133 ; Tag der Verteidigung: 27.01.2017 ; Universität Paderborn, Univ., Dissertation, 2017

AbstractThe article compares two models of lobby influence on policy choice: The Grossman and Helpman (1994) contribution‐schedules model and a negotiation between the lobbies and the government summarized by a Nash‐bargaining function. The literature uses the models interchangeably because they imply the same equilibrium policy. We show that particular assumptions about bargaining power and disagreement utility in the Nash‐bargaining solution are required for the models to lead to the same equilibrium payments and utilities. This implies that the models usually imply different sets of lobbies if lobby formation is an endogenous decision, such that the equilibrium policies also differ.

In this article, we propose a sequential Nash bargaining solution and apply it to a dynamic bargaining game on exhaustible-resource extraction. The government and two agents bargain via the asymmetric Nash bargaining solution. Should the trilateral negotiation fail, the government chooses one agent for a bilateral negotiation. In this negotiation, the disagreement point is to bargain with the other agent. Finally, should this second bilateral negotiation break down, the government chooses the welfare maximizing policy. In our dynamic bargaining game, the environmental organization is willing to pay for less extraction, because of stock-pollution effects, while the extraction firm is willing to pay for extraction per se. The government dislikes extraction, because of flow-pollution effects, but is willing to accept some if it is paid for it. It turns out that the disagreement point in the trilateral negotiation is always to bargain with the environmental organization. This is because there is no conflict of interest between the government and the environmental organization concerning extraction. However, as long as stock pollution is still low, it might be optimal for the environmental organization to let this bilateral negotiation break down. We demonstrate how these considerations shape the payments in case of agreement and disagreement, in total and over time.

Consider a lobby group of exhaustible-resource suppliers, which bargains with the government over the extraction of an exhaustible resource and over contribution payments. We characterize the path of contributions and the resulting extraction path, taking into account how the environmental damage of resource usage and the demand elasticity change optimal extraction. A high marginal environmental flow damage reduces the government s preferred speed of extraction, a low price elasticity of resource demand reduces that of the lobby. Moreover, the lobby s preferred total extraction exceeds that of the government whenever environmental stock damages exist. Contribution payments are usually positive and declining, along with the conflict of interest between the government and the lobby. In some cases, they may be increasing for while, possibly from a negative level, but they eventually decline and vanish in the long run.

AbstractIn a Hotelling model with a climate coalition and a free-riding fringe, we compare demand-side and supply-side climate policies aimed at keeping CO$_2$ concentration below a ceiling equivalent to global warming of $2^\circ{\rm C}$. With the demand-side policy, the coalition caps its fuel demand. The corresponding allocation is intra-temporally distorted. With the supply-side policy, the coalition purchases deposits. The corresponding allocation is inter-temporally distorted and the fuel extraction path can be discontinuous. In an empirically calibrated economy, a medium-sized (the grand) coalition is stable with the demand-side (supply-side) policy. If the coalition acts strategically, the stable grand coalition implements first best.

Consider a dynamic model with two countries or coalitions that consume and trade fossil fuel. A non-abating country owns the entire fuel stock and is not concerned about climate change, represented by a ceiling on the carbon dioxide concentration. The government of the other country implements public policies against global warming, either by capping domestic fuel consumption or by buying deposits to postpone their extraction. The demand [supply] side policy is inefficient because the consumers [suppliers] in the nonabating country do not internalize the climate externality. In particular, at the demand side policy aggregated fuel consumption is inefficiently low [high] in the climate coalition [non-abating country]. If strategic price incentives are strong, the coalition further depresses its fuel consumption to reduce the fuel price and hence its fuel import bill. At the deposit policy, the fossil fuel consumption and price paths are discontinuous when the ceiling becomes binding and the coalition takes over complete fuel supply. If strategic price incentives are strong, the coalition decreases its deposit purchases to reduce the fuel and the deposit price. If the coalition is the sole fuel supplier, it reduces its extraction to raise the fuel price in a monopolistic fashion.