A potential solution to the climate change social dilemma is to alter the strategic game by outlawing the 'Business as Usual' (BAU) strategy, effectively prohibiting or severely limiting harmful emissions. However, the primary obstacle to this approach is the absence of a global governing body with the authority to enforce such a law. Without a world government, there is no mechanism to penalize a sovereign nation that violates the agreement, such as taking it to an international court.

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The central question that arises from modeling climate policy as a strategic game is how to solve the underlying global social dilemma. This involves finding a way to overcome the strategic obstacles, such as conflicting interests and coordination failures identified in the models, to achieve effective international cooperation.

Solving the Climate Change Social Dilemma in a Game Theory Framework

To cite the ebook, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/.

To cite a unit, use The CORE Econ Team 2023 The Economy 2.0: Microeconomics Open access e-text https://core-econ.org/the-economy/ Unit [unit number] (url).

CORE Econ - The Economy 2.0: Microeconomics

Enforcement Challenge for Climate Agreements: The Lack of a World Government

To effectively address the social dilemma of climate change, strategic incentives must be realigned to make restricting emissions the self-interested choice for all participating countries. The objective is to modify the structure of the climate policy game, ensuring that the outcome where all parties cooperate—('Restrict', 'Restrict')—becomes a stable Nash equilibrium.

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