Global Cooperation for Reducing Carbon Emissions: the Role of Carbon Taxes

As the world grapples with the challenges of climate change, international cooperation and effective policy tools are crucial for reducing carbon emissions and achieving a sustainable future. This study uses a game-theoretical approach to investigate the negotiations between countries with high and low carbon dioxide emissions, with the goal of achieving zero carbon dioxide emissions by 2050. By fostering collaboration and understanding among nations, game theory provides a robust framework for addressing the complexities of global climate policy. Game theory provides a mathematical framework to model strategic behaviors in climate negotiations between high and low carbon dioxide-emitting countries. By analyzing the payoff functions, the Nash equilibrium strategies for emission reduction efforts are derived. The introduction of a carbon tax increases the marginal cost of emissions, leading to higher equilibrium efforts by both country groups. Simulation results indicate a significant increase in emission reductions with the tax, demonstrating the tax's effectiveness in incentivizing climate action and contributing to global mitigation efforts. This result highlights the potential economic benefits of carbon taxation, including innovation incentives and reduced emissions, which can drive sustainable economic growth and job creation. However, the study also acknowledges potential costs, such as impacts on economic competitiveness and distributional fairness, which must be carefully considered and addressed in policy design. This research offers valuable insights for policymakers, highlighting the importance of crafting carbon tax policies that maximize environmental benefits while minimizing adverse economic and social effects. By balancing these considerations, policymakers can develop more effective strategies that support both environmental sustainability and economic resilience.