Game theory is a tool utilized in economics to analyze the consequences of interaction among rational agents. It has been found to be especially useful for evaluating the workings of economic schemes at the theoretical level and also designing a possible mechanism to improve the economic system. In environmental economics, the use of game theory is most prominent in the analysis of IEAs (international environmental agreements), and the current negotiations on post-Kyoto (or post-2012) present a potential interesting application of game theory. Furthermore, such studies inspire further use of game theoretical tools in the study of such issues. In this chapter, we examine game theory analysis in this context and suggest some further directions of study with an emphasis on the role played by one particular mechanism under the Kyoto protocol (KP) called the CDM (clean development mechanism).
Kyoto mechanisms are supplementary measures included in the Kyoto protocol (adopted in 1997 and entered into force in 2005) under the United Nations Framework Convention on Climate Change (UNFCCC), so that Annex B nations (nations listed in Annex B of KP, which essentially coincide with nations listed in Annex I of UNFCCC) can achieve their emission targets in a cost-effective manner. There are three measures involved that will be made operational during the first commitment period (between 2008 and 2012).
After 2013, no concrete scheme has been determined yet, and this is the issue discussed through several channels currently and is referred to as the post-Kyoto (or post-2012) negotiation.
Below, we first consider the so-called Kyoto mechanisms (flexibility mechanisms included in Kyoto protocol) from the viewpoint of possible game theoretical appraisal. Then, in the next section, we examine the current post-Kyoto negotiation along with a game theoretical analysis of the IEAs by making use of a
I. Dincer et al. (eds.), Global Warming, Green Energy and Technology,
DOI 10.1007/978-1-4419-1017-2_26, © Springer Science+Business Media, LLC 2010
simple example, and then we attempt to list the problems related to game theory that are occurring in the course of that negotiation and also the practice of the Kyoto mechanisms.
Was this article helpful?
Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.