The energy transition in a climate-constrained world: Regional vs. global optimization

We consider two prototypical situations: (i) a collaborative environment where all actors strive to maximize a world utility - the global optimum - and (ii) a situation where actors optimize the utility of their own country - a solution that corresponds to a Nash equilibrium. The difference between both outcomes can be used to classify the severity of the 'tragedy of the commons effect'. We present results about the dependence of the severity of this effect on several key parameters (i) the number of actors, (ii) the heterogeneity and severity of expected climate damages, (iii) assumptions about technology diffusion and (iv) fossil fuel depletion.