تجزیه و تحلیل بازی جوی برای انتشار تجارت CO2 در میان سازمان های مختلف جهان

This paper simulates the saving in terms of the total abatement cost of CO2 emission reductions for different trading games reflecting the potential cooperation among organizations including the European Union (EU), the Asia-Pacific Economic Cooperation (APEC) countries, the Union of South American Nations (USAN), and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). A game approach is conducted to determine if the cooperation will come into existence among the organizations stated above. A similar idea is applied to the four largest emission countries, China, the United States, Russia, and India, as four individual players in the trading game. Joining the market is the strictly dominant strategy for any organization from the results. The Nash equilibrium shows that, regardless of the organizations that have already existed in the market, joining the market is always the best policy for the remaining organizations which are currently not in the market. Similarly, India likes the organization to which it belongs, i.e. IOR-ARC, to trade with the EU and APEC, and the U.S. wants the organization to which it belongs, i.e., APEC, to cooperate with the organizations USAN and IOR-ARC. However, China and Russia prefer trading with other countries within their own organizations.

The design and selection of policy instruments for increasing the incentive for each country to participate are normally the keys to the success of agreements such as that to reduce emissions of carbon dioxide (CO2) internationally. Theoretically, the incentive can be based on a comparison of the costs and benefits of a specific policy instrument. The highest incentive will be the one that generates the highest net benefit for achieving the committed target. However, empirically computing the net benefit from the policy is normally difficult to achieve. As such, searching for the lowest cost, i.e., employing a cost-effectiveness approach to achieve the designed and committed target or generate the highest saving in terms of the total abatement cost (TAC) both with and without participating in the arrangement, becomes a pragmatic substitute. According to the literature, there are three types of factors that affect the formation of incentive structures for the emission reduction commitment under an emission trading scheme.4 The first relates to the number of countries joining the agreement (Eyckmans and Kverndokk, 2010). The second concerns the allocation of initial rights. The third has to do with the coalitions that the countries form. Different combinations of these factors affect the marginal abatement cost (MAC) for all the countries joining the commitment array (Berk and den Elzen, 2001, Fletcher, 2001, Haites and Yamin, 2000 and Maradan and Vassiliev, 2005). There are two issues regarding the number of countries joining in the agreement. One concerns the number of countries making up the emission reduction commitment and the other the number of countries joining in the emission trading market. Due to the cross-country nature and trans-boundary characteristics of CO2 emissions, the consequences of cumulative CO2 emissions are usually not borne by the countries that emit them. As a result, a free-rider problem exists. To fulfill the global emission reduction target, there is the idea that more countries should join in the commitment array (Buchner and Carraro, 2003, Liou and Wu, 2010, Ringius et al., 2002 and Viguier, 2004). Theoretically, the more countries that there are in the trading market, the more variations of MAC there will be. There is thus a high possibility for trading to come across (Chen and Zhang, 2005). In addition, under the assumptions of perfect competition and/or no transaction costs (or where the transaction costs are insignificant) the saving in the total abatement cost will be as large as the number of countries getting involved in the emission trading market from a global perspective (Wu et al., 2010). However, the benefit or welfare that each country or organization possesses differs as the highest saving in TAC in the world is reached. As such, the design of an incentive mechanism for those countries or organizations that do not commit to any emission reduction is essential for a global target to be reached. The cooperation among organizations through a game where the emission reductions are determined has to be assessed. The literature in the past has focused on the issue involving the theory of the climate game to describe the willingness that a certain country or group of countries has in deciding to commit to a CO2 emission reduction. A study conducted by Pronove (2002) indicates that there is already an existing emission trading market for CO2, such as in the countries of the European Union (EU). In addition, efforts to engage in emission trading or other cooperation for development of green economy have consistently been made in countries such as Denmark, the U.K., Norway, Germany, France, Austria, and Japan (Barrett and Stavins, 2003, Carfi and Schilirò, 2012, Jacobsen, 1998 and McKibbin and Wilcoxen, 2002). However, in a way that is similar to those studies conducted for the EU, trading for these countries also takes place within these countries (Eyckmans et al., 2002). Moreover, past climate game analyses are either based on the chicken game or the prisoner's dilemma game and place emphasis on the theoretical discussion of damage occurring under the designated probabilities of various uncertain factors (Akimoto et al., 2000, Asheim et al., 2006, Carraro, 2003, Chen and Zhang, 2005, Okada, 2007, Pittel and Rübbelke, 2012 and Svirezhev et al., 1999). That is, these studies are mainly purely theoretical simulation analyses. Furthermore, Wood (2011) uses a theoretical model to generalize various climate models and concludes that it is countries that are normally the decision makers in related research and the payoff is the total welfare of the country derived from the game. The results of the studies stated above and those of other studies such as Carraro and Moriconi (1997), Forgó et al. (2005), Haurie and Viguier (2003), and Scheffran and Pickl (2000) are arrived at only through numerical calibrations instead of actual estimations of emission reductions. In addition to this, past studies usually assume that there is an existing market. Research interests are employed to analyze the impact for members (countries) that are already in the market or for those countries that are members of certain organizations, such as the EU, or are among the Annex B countries of the Kyoto Protocol (Bréchet et al., 2010, Forgó et al., 2005 and Jaehn and Letmathe, 2010). A Cournot–Nash equilibrium is resolved for market suppliers of Russia and China under the emission rights demands of Annex B countries (Bernard et al., 2008). Studies are also conducted for individual countries which are either suppliers or demanders of emission rights to analyze the equilibrium price and/or equilibrium quantity (Godal and Holtsmark, 2011, Hopkin, 2004, Lee, 2011, Viguier, 2004 and Von Der Goltz, 2009). As a result, to enrich the development of the current literature the purpose of this paper is to simulate the saving in TAC for different emission trading games that reflect the potential cooperation among organizations. Since it is impossible for all countries to take part in the trading simultaneously at the current stage, it is assumed that the game takes place at the organizational level. The simulations are then accomplished for the existing organizations of the EU, the Asia-Pacific Economic Cooperation (APEC) nations, the Union of South American Nations (USAN), and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). These four organizations are the players in the trading game. A game approach is then conducted to determine if the cooperation will come into existence among the organizations stated above. A similar idea applies to a few of the largest emission countries, i.e., China, the U.S., Russia, and India, which are treated as four individual players in the trading game.

This study simulates the savings in the total abatement costs of CO2 emissions for different trading games which reflect the potential cooperation that exists among organizations already in existence, such as the European Union (EU), the Asia-Pacific Economic Cooperation (APEC), the Union of South American Nations (USAN), and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). A game approach is conducted to determine if the cooperation will come into existence among the organizations stated above. A similar approach is tested for the four largest emission countries, i.e., China, the U.S., Russia and India, as four individual players in the trading game. It is concluded that taking into account the preferences of other countries and/or organizations of each organization or individual country participating in the trading game can help in determining whether joining the existing market is the best policy for them to choose from. Such results are applicable to different trading games regardless of what organizations already exist in the market. The estimation results show that joining the market is the strictly dominant strategy for any organization regardless of which organization is already in the market. That is, the Nash equilibrium for EU, APEC, USAN and IOR-ARC is to join the existing market. This will simultaneously bring the highest saving in the total abatement cost for the organizations which are already in the market. The simulated results are observed for the individual countries with the highest emissions, namely, China, India, Russia and the U.S. It is observed that India and the U.S. will have the highest saving in terms of the total abatement cost from trading. Among these countries, India likes the organization, IOR-ARC, to which it belongs, to trade with the EU and APEC organizations in order to experience savings in the total abatement cost through sales of emission rights. Similarly, the U.S. prefers the organization to which it belongs, i.e., APEC, to cooperate with the USAN and IOR-ARC organizations. Under such circumstances, the U.S. will reduce its total abatement cost after buying emission rights. The remaining two countries, China and Russia, prefer trading with countries within their own organizations. As such, China and Russia are both acting as sellers in the trading market. The simulated results and framework of trading games proposed in this study can be used as a potential success guide for the negotiations and cooperation among organizations. For any country with CO2 emissions, a commitment to achieve a reduction might be enforced in order to accomplish the goal of reducing emissions in the future.