Potentially Harmful International Cooperation on Global Public Good Provision

19 Pages Posted: 13 Mar 2014

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: April 2014

Abstract

Experience from climate policy suggests that full cooperation among all countries is not a likely outcome. In this paper we therefore consider the case where only members of a subgroup of countries cooperate by reciprocally matching their public good contributions. In a two‐stage game, matching rates are set at stage 1 then national contributions are chosen at stage 2. In the case of small coalitions, negative matching may result in the subgame‐perfect equilibrium that decreases global public good provision and outsiders' welfare. Moreover, a growing number of countries may paradoxically entail a reduction of equilibrium public good supply.

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

Suggested Citation

Buchholz, Wolfgang and Cornes, Richard C. and Rübbelke, Dirk T. G., Potentially Harmful International Cooperation on Global Public Good Provision (April 2014). Economica, Vol. 81, Issue 322, pp. 205-223, 2014. Available at SSRN: https://ssrn.com/abstract=2408253 or http://dx.doi.org/10.1111/ecca.12074

Wolfgang Buchholz (Contact Author)

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

Technische Universität Bergakademie Freiberg ( email )

Freiberg, 09599
Germany

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