Bargaining on Morals and Markets in International Climate Policy – Christian Henning

Speaker

Christian Henning (Kiel University (CAU))

Abstract

This paper analyze bargaining on international climate policy in climate clubs, where club members decided on a common carbon price based on a constitutional decision rule. Carbon prices are implemented via global permit markets given a fixed allocation of permit rights and fixed cost shares of members. Decision rule, permit right allocation and cost shares define the institutional club regime. Under these conditions bargaining net-benefits among countries occurs in two-steps. First, within a given institutional club regime as legislative bargaining on climate policy. Secondly, as constitutional bargaining on the institutional design of club regimes, i.e. the distribution of permit rights and finance shares between club members, respectively. To reduce complexity of constitutional bargaining members apply moral principles restricting acceptable institutional rules. Bargaining is modelled applying a Mean Voter Theorem derived from a new non-cooperative legislative bagaining model.  Main results  derived from  metamodeling the DART-model include: (i) while there exist club designs that imply almost zero-emissions these designs do not correspond to a constitutional bargaining equilibrium. Vice-versa equilibrium  club design implies only moderate emission cuts. (ii) Moreover, in general  there exists a trade-off between economic efficiency  and ecological effectiveness climate club policy arrangements. (iii)  there exists a general trade-of between moral principles and political stability of climate clubs ( i.e. countries incentives of second-order free-riding).

Authors

Christian Henning (University of Kiel (CAU)) – Karl-Friedrich Boy (University of Kiel (CAU))

Room

Lecture Hall (A-032)