Keywords: global warming, international environmental transfers, clean development mechanism, differential game, open-loop Stackelberg equilibrium, credit-based transfer, Kyoto protocol, dynamic game modelling, global stock pollution, emission abatement, simulation, greenhouse gases
Environmental transfers against global warming: a credit-based program
This paper investigates the impacts of institutionalising a credit-based transfer program between developing and developed countries. Such a program is expected to become an essence of the Clean Development Mechanism in the Kyoto protocol. The provisions of financial and technological transfers are incorporated simultaneously into a dynamic game model of global stock pollution, where the efficiency in emission abatement is also described as a stock variable. Our numerical simulation indicates that a credit-based transfer program can be more beneficial for a recipient country as well as for a donor country, than a non-credit-based transfer program.