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Game Theory and International Environmental Co-operation: A Survey with an Application to the Kyoto-Protocol

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Working paper
Michael Finus
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The game theoretical analysis of international environmental problems has received increasing atten- tion in recent years. This is not surprising. Game theory analyzes the interaction between agents, for- mulates hypotheses about their behavior, and predicts the final outcome. Therefore, game theory is particularly suited to analyze the incentive structure of international environmental problems. Central questions which can be investigated with this method are: Under which conditions will an interna- tional environmental agreement (henceforth abbreviated IEA) be signed and ratified? On which re- duction targets will the negotiators agree? How many and which countries will sign an IEA? Will the agreement be stable? Which measures may be used to stabilize an IEA?
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