Template-Type: ReDIF-Paper 1.0
Author-Name: Suzi Kerr
Author-X-Name-First: Suzi
Author-X-Name-Last: Kerr
Author-Email: suzi.kerr@motu.org.nz 
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Steffen Lippert
Author-X-Name-First: Steffen
Author-X-Name-Last: Lippert
Author-Email: s.lippert@auckland.ac.nz
Author-Workplace-Name: University of Auckland
Author-Name: Edmund Lou
Author-X-Name-First: Edmund
Author-X-Name-Last: Lou
Author-Email: edmund.lou@northwestern.edu
Author-Workplace-Name: Motu Economic and Public Policy Research
Title: Financial Transfers and Climate Cooperation 
Abstract: We investigate the impact of side-payments to countries that have a low net benefit from participating in efficient climate cooperation in a repeated games framework with investment in different technologies. We consider different timings of these payments and different degrees of commitment. If countries cannot commit ex ante to transfer funds to low-benefit participants to an agreement, then there is a trade-off. Investment based agreements, where transfers occur before emissions are realized, but after investments have been committed, maximize the scope of cooperation. Results-based agreements minimize transfers whenever these agreements implement cooperation. If countries can commit to transfer funds, then agreements in which countries with high benefits of climate cooperation pre-commit to results-based payments to countries with low benefits both maximize the scope of cooperation and minimize transfers.
Length: 46 pages
Creation-Date: 2019-03
File-URL: https://motu-www.motu.org.nz/wpapers/19_04.pdf
Number: 19_04
Classification-JEL: Q54, Q56, Q58, F55, F53
Keywords: game theory, cooperation, repeated games, climate change, international agreement
Handle: RePEc:mtu:wpaper:19_04