Time-Consistency and Environmental Efficiency of Closed
International Agreements (IEA)
Yulia Pavlova
[email protected]
Researcher, MSc,
Dept. of Mathematical Information
Technology,
University of Jyväskylä,
Finland
Supervisors:
PhD Maria Dementieva (University of Jyväskylä)
Prof. Victor Zakharov
(St.Petersburg State University)
Prof. Pekka Neittaanmäki (University of Jyväskylä)
Research Background
Agreement modeling as a coalition of players:
 non-cooperative (Carraro, Barrett) or cooperative (Petrosjan, Zakharov),
 static (Carraro, Barrett, Tarasyev) or dynamic (Zaccour, Kaitala, Zakharov, Ulph).
Structure of Coalition Formation in Membership Models*
(Chandler,Tulkens)
1st Stage: participation
Sequence
Simultaneous (Yi )
(no revision of members)
Sequential (Carraro)
(revision of members)
Agreements Single (Carraro, Barrett, Yi)
Multiple (Finus, Yi.)
Membership Open (Carraro, Barrett, Yi )
exclusive (majority, unanimity)
(Yi )
2nd Stage: abatement and transfers
Sequence
simultaneous (Cournot,Nash) (Yi )
sequential (Stackelberg)
Abatements
joint welfare maximization
(efficient) (Carraro, Barrett, etc.)
bargaining (majority, unanimity)
Transfers
no
yes (Tarasyev)
Payoffs
social planner/ material/
certain (Yi, Barrett, Pavlova, etc.)
political/ non-material/ uncertain
(Tarasyev)
(Tarasyev)
*free-riders – those who deviate from participation (other option – deviate from commitment)
at the moment, plan to be contribute
Problem
•characterize initial (t=0) abatement commitments ej and propose optimal
abatement scheme in dynamics ej([t,m]), t=0,…,m ;
•specify coalition structure S of IEA at initial moment t=0; explore time-consistency
of IEA during t=1,…,m.
Model
2-level multistage coalitional game with perfect information (players are familiar with
type of others, 2-level model means 1st level (leader) – coalition, 2nd level (follower) –free-riders
where t=1,…m,
N – heterogeneous players (nations), K groups,
- players’ abatement targets, j=1,…,N, and E= Σ ej,
- net benefit.
Key concepts3,12
Self-enforcing coalition
1. internal stability
2. external stability
Time-consistency of self-enforcing coalition
1. internal time-consistency
2. external time-consistency
Results
1. Analytical solution of abatement commitments
(a,b,ci,n,N)
- positive and finite (as Stackelberg equilibrium);
2. Optimal abatement scheme (Stackelberg solution coincides wish Nash
equilibrium)
for t=0,…,m-1
3. Specification of time-consistency conditions of coalition and
abatement solution for the multistage model;
a) A threshold level of size n' of coalition S to be
environmental efficient*;
b) Time-consistency of a closed coalition**,
if coalition size > n' ;
c) Time-consistency of abatement scheme (Stackelberg
solution).
* If one player leaves a self-enforcing IEA, total abatement can only reduce;
**if at t=0 S is self-enforcing coalition , and at t=1,…m no new members are allowed in, old
signatories are free-to leave
Further Plans
To continue game-theoretic analysis of existing and being under
discussion agreements, it is necessary
• to address issue of time-consistency of an IEA during its life-cycle* and
design such policy measures as financial transfers and delayed payoffs
(to promote endogenous cooperation within IEA);
• to assess agreement life-cycle and players discounted payoffs;
• to explore time-inconsistent IEA evolution;
• to introduce uncertainty about payoffs (incomplete information).
*life-circle means length of period [0,m]
Reference
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