The Strategic Value of Unilateral Abatement in Games of Climate Change Policy

Abstract

Unilateral abatement of greenhouse gas emissions is not often explicitly considered in game-theoretic models of climate policy adoption and in reality is often justified on grounds of non-climatic benefits. We develop one non-cooperative static game and two non-cooperative dynamic games that show how allowing players to respond to commitments to unilaterally abate emissions expands the range of parameter values that support joint abatement. Importantly, joint abatement occurs only via initial unilateral abatement whenever the parameter values support joint abatement in the two dynamic games but not in the static game. The dynamic games also show that if unilateral abatement lowers costs for later abaters, then still more states of the world support joint abatement. When assessing the climatic benefits of unilateral abatement, we should consider not only the direct reductions in the abater's emissions but also the effect on other emitters' future adoption of climate policies. Unilateral abaters may want to design their climate policy instruments so as to encourage future abatement by others, which could mean focusing on the promotion of technological innovation and diffusion and on providing policy models that others could adapt to their own contexts.