  We build a dynamic multi-region model of climate and economy with emission
permit trading among 12 aggregated regions in the world. We solve for the
dynamic Nash equilibrium under noncooperation, wherein each region adheres to
the emission cap constraints following commitments that were first outlined in
the 2015 Paris Agreement and updated in subsequent years. Our model shows that
the emission permit price reaches $811 per ton of carbon by 2050. We
demonstrate that a regional carbon tax is complementary to the global
cap-and-trade system, and the optimal regional carbon tax is equal to the
difference between the regional marginal abatement cost and the permit price.
