Cooperative equilibrium of the China-US-EU climate game

Abstract

The top three carbon emitters, the European Union (EU), China, and the United States (US), account for up to 50% of the global total, and actions of them are deterministic for the ambitious target of the Paris Agreement. Towards carbon neutrality, while the EU has been consistently leading and the US has been swinging, China features a drastic but firm change of stance from a passive responder to a proactive leader in the past decade. Drawing the literature comparing their policies and plans, this paper analyzes the behaviors of the three actors within a theoretical framework of rational choice and applies game theory to find the Nash equilibria of their strategy combinations. Considering the complex variations in socioeconomic and international relations criteria, our ternary game model shows that the Nash equilibria evolve with time and are different from that of the prevalent Prisoner's Dilemma. Importantly, we found the collective cooperation strategy combination forms the only Nash equilibrium in the 2010s and after. Our model provides an explanation for the historic behaviors of the three players and allows for the prediction of their future environmental policy directions.

Keywords

• Climate change
• Carbon neutrality
• Game theory
• Nash equilibrium
• Paris agreement
• Cooperation