Groupe d’études et de recherche en analyse des décisions

G-2020-47

An oligopoly game of CDR strategy deployment in a steady-state net-zero emission climate regime

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In this paper, we propose a simple oligopoly game model to represent the interactions between coalitions of countries in deploying Carbon Dioxide Removal (CDR) strategies in a steady-state net-zero emission climate regime that could take place by the end of the 21\(^{st}\) century. The emission quotas and CDR activities obtained in the solution of this steady-state model could then be used as a target for end-of-period conditions in a dynamic integrated assessment analysis studying the transition to 2100. More precisely, we analyze a steady-state situation where $m$ coalitions exist and behave as m players in a game of supplying emission rights on an international emission trading system. The quotas supplied by a coalition must correspond to the amount of CO\(_2\) captured through CDR activities in the corresponding world region. We use an extension of the computable general equilibrium model GEMINI-E3 to calibrate the payoff functions and compute an equilibrium solution in the noncooperative game.

, 23 pages