Pledge-and-Review Bargaining: from Kyoto to Paris

Abstract

A tractable dynamic model of international climate policies is analysed. Different bargaining games influence participation levels, emission quotas, and technology investment levels. I derive several predictions which are arguably consistent with the differences between the 1997 Kyoto Protocol and the 2015 Paris Agreement – including the transitioning from the former to the latter.

Prices vs. quantities for self-enforcing agreements

“…The results are related to those inTarui and Polasky (2005), who also find that price instruments and quantity mandates accomplish the same outcome in a regulatory regime based on rules (in which the authority is the initial mover), but they generate different outcomes under a discretionary regulation (in which emission regulation takes place after investment).20 This variant of the game is studied inHarstad (2021), but that paper does not discuss how technology influences compliance.…”

Pledge-and-review bargaining

“…Furthermore, the modesty can deter free riding (Finus and Maus, 2008). My follow-up paper (Harstad, 2023) embeds the pledge-and-review bargaining outcome in a dynamic climate policy with endogenous emissions, technologies, participation, and compliance, and shows that the P&R game can rationalize five facts regarding how the Paris Agreement differs from the Kyoto Protocol of 1997.…”

(Un)Trustworthy pledges and cooperation in social dilemmas

“…With commitment devices, for instance, pledgers themselves change their incentive structure such that fulfilling the pledge aligns with their self-interest (Reischmann and Oechssler, 2018). This extends to mechanism such as 'pledge-and-review' (Barrett and Dannenberg, 2016) that can be designed to implement pledges only after unanimous agreement (Harstad, 2023). The incentive structure also changes when the threat of peer punishment is present, offering another pathway to supporting other parties' confidence in the pledge (Lippert and Tremewan, 2021).…”