# Chapter 8 Sensitivity analysis

As simulation results depend on parameter values which are subject to uncertainties associated with the numerical model, we conduct a sensitivity analysis to examine how the main assumptions affect the model results.

The crucial parameters in this model are : - Pollution Stock parameter - Environmental damage - discount rate r .

=> double or halve the base value the 1st and 2nd parameter

=> change the base value of the discount rate r from 2% to 1% and 3%, .

## 8.1 Sensitivity analysis

Scenario | Global emissionabatement \(CO_2\) GtC over 24 years | Global emission abatement \(SO_x\) GtC over 100 year | (NPV) Billion US$ over 24 years |
---|---|---|---|

Base case | All Singletons | ||

Base case | Grand Coalition | ||

Base case | Stable coalitions | ||

Change in damages scale parameter 50% less | All Singletons | ||

Change in damages scale parameter 50% less | Grand Coalition | ||

Change in damages scale parameter 50% less | Stable coalitions | ||

Change in damages scale parameter 50% more | All Singletons | ||

Change in damages scale parameter 50% more | Grand Coalition | ||

Change in damages scale parameter 50% more | Stable coalitions | ||

Change in the discount rate 50% less | All Singletons | ||

Change in the discount rate 50% less | Grand Coalition | ||

Change in the discount rate 50% less | Stable coalitions | ||

Change in the discount rate 50% more | All Singletons | ||

Change in the discount rate 50% more | Grand Coalition | ||

Change in the discount rate 50% more | Stable coalitions |

Check the ratios between firms??? Did they remain almost unchanged. results in terms of stability are robust with respect to the investigated changes in the values of these key parameters

## 8.2 Discussion

In this thesis, we examine the stability of all possible climate coalitions in a cartel game under different taxation schemes using a numerical analysis.

We investigate to what extent different types of taxation schemes can contribute to the stability of Industry level climate coalition using our applied model STAICO

The results of our model analysis should always be interpreted with the specific settings of the model and the underlying assumptions in mind

we emphasise that our analysis does not focus on multiple coalitions or on renegotiations, and that our conclusions only refer to one-shot cartel games.

Question : - Do large asymmetries between firms imply the gains from cooperation are large, ???? that free-rider incentives are large (cf. Barrett, 1994). - Will taxation policies play a role in mitigating the free-rider incentives and aligning firms’ incentives to induce larger and more effective stable coalitions ???

For each numerical example, the GA algorithm detailed earlier has been solved 10 times (10 trials) for each of the following number of iterations: T=1000, 2000, 5000, 10 k, 50 k, and 100 k iterations

a well-loaded 20,000+-TEU vessel achieves the lowest fuel consumption per TEU, while using more smaller ships to deal with inadequate hinterland infrastructure would increase greenhouse gas (GHG) emissions per nautical mile. Today, block-type storage yards with automated stacking cranes enable containers to be stacked closely. This doubles storage capacity without needing more space.

far the lowest abatement costs along with the greatest abatement benefits. Effectively, they postulate that this imbalance among the regions seems to be negating the formation of almost any other coalitions in this non- cooperative situation.

Identification of those firms who will likely comply with industry level environmental regulations and whether or not any coalitions will form under extant industry conditions will be of interest to environmental regulators, among others. To this end, we expect that a greater balance of environmental costs and benefits across major shipping companies will permit more (stable) industrial coalitions to form than have been identified in the STACO global model scenarios.