Wednesday, April 22, 2015

Hey, Kids! Join the Climate Club!

Climate Clubs: Overcoming Free-Riding in International Climate Policy 

William Nordhaus 
American Economic Review
April 2015, Pages 1339-1370 

Abstract: Notwithstanding great progress in scientific and economic understanding of climate change, it has proven difficult to forge international agreements because of free-riding, as seen in the defunct Kyoto Protocol. This study examines the club as a model for international climate policy. Based on economic theory and empirical modeling, it finds that without sanctions against non-participants there are no stable coalitions other than those with minimal abatement. By contrast, a regime with small trade penalties on non-participants, a Climate Club, can induce a large stable coalition with high levels of abatement.

Nod to Kevin Lewis

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