The United States and China are the two largest carbon emitters in the world. If both...

 

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The United States and China are the two largest carbon emitters in the world. If both countries cut their net emission to O by 2030, each will gain a net benefit of 1 billion each year taking into consideration of the costs as well as the impact on ecosystem and economy. If one of them implements a policy to reach zero emission by 2030, while the other country does nothing. The country that implements the net-zero policy will receive a net loss of 1 billion, and the country that does not do anything will still receive a benefit of 3 billion each year. If none of them acts to reach zero emission, the deteriorating environment will cause each country to lose 1 billion each year. a. Use a game matrix to depict the situation using the net benefits (differences between benefits and costs) as payoffs. b. Explain the Nash Equilibrium of the game if each country is left to make decisions independently at once (simultaneous one-shot game). c. What mechanism can be used to encourage countries to commit on climate change? Illustrate one solution using game theory (Explain how your solution changes the payoff and the Nash Equilibrium). The United States and China are the two largest carbon emitters in the world. If both countries cut their net emission to O by 2030, each will gain a net benefit of 1 billion each year taking into consideration of the costs as well as the impact on ecosystem and economy. If one of them implements a policy to reach zero emission by 2030, while the other country does nothing. The country that implements the net-zero policy will receive a net loss of 1 billion, and the country that does not do anything will still receive a benefit of 3 billion each year. If none of them acts to reach zero emission, the deteriorating environment will cause each country to lose 1 billion each year. a. Use a game matrix to depict the situation using the net benefits (differences between benefits and costs) as payoffs. b. Explain the Nash Equilibrium of the game if each country is left to make decisions independently at once (simultaneous one-shot game). c. What mechanism can be used to encourage countries to commit on climate change? Illustrate one solution using game theory (Explain how your solution changes the payoff and the Nash Equilibrium).

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Step 13 GAME METRIX USING NET BENEFITS USCHINA US CHINA If loss is considered as the cost then when ... View the full answer