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Luring others into climate action: coalition formation games with threshold and spillover effects

Bosetti, Valentina, Heugues, Melanie and Tavoni, Alessandro (2017) Luring others into climate action: coalition formation games with threshold and spillover effects. Oxford Economic Papers, 69 (2). pp. 410-431. ISSN 0030-7653

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Identification Number: 10.1093/oep/gpx017

Abstract

We explore the prospects of cooperation in a threshold public bad game. The experiment’s setup allows us to investigate the issue of effort coordination between signatories and non-signatories to a climate agreement under the threat of a catastrophe. Motivated actors may signal willingness to lead by committing a share of investments to a ‘clean’ but less remunerative project. The game is parametrized such that the externality cannot be fully internalized by the coalition, so that some effort on the part of the second movers is required if the catastrophic losses are to be avoided. We manipulate both the relative returns of two investments and the extent to which the gains from leadership diffuse to second movers. We find that the likelihood of reaching a sizeable coalition of early investors in the clean technology is higher when the benefits are appropriated by the coalition. Conversely, spillovers can entice second movers’ adoption.

Item Type: Article
Official URL: https://oep.oxfordjournals.org/
Additional Information: © 2017 Oxford University Press
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C92 - Laboratory, Group Behavior
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q50 - General
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 19 Jan 2017 18:09
Last Modified: 20 Jul 2019 02:28
URI: http://eprints.lse.ac.uk/id/eprint/68931

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