Potentially Harmful International Cooperation on Global Public Good Provision

22 Pages Posted: 22 Aug 2012

See all articles by Wolfgang Buchholz

Wolfgang Buchholz

Universitaet Regensburg; CESifo (Center for Economic Studies and Ifo Institute)

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce; CESifo (Center for Economic Studies and Ifo Institute)

Dirk T. G. Rübbelke

Technische Universität Bergakademie Freiberg

Multiple version iconThere are 2 versions of this paper

Date Written: July 31, 2012

Abstract

Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In doing so, we link the literature on partial cooperation with so-called matching approaches. Matching schemes are regarded as providing a promising approach to overcome under supply of public goods like climate protection. The functioning of matching mechanisms in a setting with an incomplete agreement, i.e. a contract where only a subset of the players participates, has however not been investigated yet. This paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection. We analyze their effect on both welfare and the global climate protection level. We show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders.

Keywords: coalition formation, public goods, matching, Pareto optimality, partial cooperation

JEL Classification: C780, H410, Q540

Suggested Citation

Buchholz, Wolfgang and Cornes, Richard C. and Rübbelke, Dirk T. G., Potentially Harmful International Cooperation on Global Public Good Provision (July 31, 2012). CESifo Working Paper Series No. 3891. Available at SSRN: https://ssrn.com/abstract=2133157

Wolfgang Buchholz

Universitaet Regensburg ( email )

D-93040 Regensburg, 93053
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Richard C. Cornes

Australian National University (ANU) - Faculty of Economics & Commerce ( email )

Canberra, Australian Capital Territory 2601
Australia

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Dirk T. G. Rübbelke (Contact Author)

Technische Universität Bergakademie Freiberg ( email )

Freiberg, 09599
Germany

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