Abstract
The present paper compares the Kyoto Protocol and the Paris Agreement in a dynamic game in which countries choose emissions reductions, investments in green energy and the contract duration. Green investment costs are stock-dependent. Applying Harstad’s (2020a, 2020b) bargaining model for the Paris Agreement we show that there is a large set of economies at which the Kyoto Protocol performs better in terms of total emissions and welfare than the Paris Agreement, which is in stark contrast to the results of Harstad (2020a, 2020b). Although the stable climate coalition is large at the Paris Agreement and small at the Kyoto Protocol, the emissions reductions of a single coalition country is much deeper at the Kyoto Protocol such that this per-country-emissions reduction effect outweighs the disadvantage of having a smaller stable climate coalition.
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