Cooperation of climate clubs

The slow progress of international climate change negotiations under the UNFCCC has led to calls for discussions in other, non-global fora, so-called "climate clubs". While the existence of stable agreements has been extensively studied in a global setting, cooperation of countries in such a club presents a new situation. I account for these specific circumstances by applying the concept of a subgame of a cooperative game to the game of global negotiations. The results are less optimistic than in the case of global negotiations, and the existence of a stable agreement in the climate club crucially depends on damage and abatement cost parameters of club members and outsiders. I also find that heterogeneity of countries negatively affects the chances of cooperation. An example is provided by the application of the model to the case of the Group of Twenty.