China, the United States, bargaining, and climate change

Knowing what is at stake in terms of likely damages from accumulating greenhouse gases, how can major emitters fail to reach agreement on limits? Bargaining analysis suggests that an uneven distribution of abatement costs over time may play a significant part. Using a stylized, complete-information model of the strategic space facing the two largest emitters of greenhouse gases, China and the United States, a simple numerical example reaches a strong and surprising conclusion: To be feasible under current technological and economic conditions, any international agreement on climate change will have to allocate a level of future emissions for carbon dioxide in China that is at least twice as large as the level for the United States, in order to account for the effects on Chinese interests from continued economic growth.