New Horizons in Environmental Economics series
Chapter 16: Summary and Conclusions
After important terms, the notation of this book and the structure of game theory had been laid out in Chapter 2, we started out in Chapter 3 by analyzing four simple matrix games: the prisoners’ dilemma, the chicken, the assurance and the no-conﬂict games. The analysis ﬁrst focused on two countries only (Sections 3.2–3.5) and was then extended to N countries. Depending on the cost–beneﬁt structure of an abatement policy, either no cooperation, cooperation among some countries or cooperation among all countries could be explained. Though these matrix games are rather simple by their nature, basic features of the coalition models in Chapters 13–15 could already be depicted. In Chapter 3 it was also shown that though there is no external coordinator endowed with the power to enforce an IEA, and hence countries must play a correlated Nash equilibrium, coordination may improve upon the non-cooperative outcome. This result was demonstrated with the help of the chicken game. It was pointed out that future research should derive conditions under which coordination is possible and that it should scrutinize whether it is possible to transform a game such that coordination can be applied more eﬀectively. Moreover, retrospectively of the coalition formation models, it seems promising to look at the eﬀect of coordination in an N-country world. Due to the complexity of this issue, it seems promising to look ﬁrst at some of the reduced coalition formation games of Chapter 15. Due to their simple structure,...
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