The strategic dimension of financing global public goods

dc.bibliographicCitation.firstPage103423
dc.bibliographicCitation.volume127
dc.contributor.authorKornek, Ulrike
dc.contributor.authorEdenhofer, Ottmar
dc.date.accessioned2022-12-08T07:12:01Z
dc.date.available2022-12-08T07:12:01Z
dc.date.issued2020
dc.description.abstractOne challenge in addressing transboundary problems such as climate change is the incentive to free-ride. Transfers from multilateral compensation funds are often used to counteract such incentives, albeit with varying success. We examine how such funds can change the incentive to free-ride in a global public-goods game. In our game, self-interested countries choose their own preferred course, deciding their voluntary public good provision, whether to join a fund that offers compensation for providing the public good and the volume of compensatory payments. We show that (i) total public-good provision is higher when those contributing are given more compensation; and (ii) non-participation in the fund can be punished if the remaining members decrease their public-good provision sufficiently. We then examine three specific fund designs. In the first, the compensation paid to each country is equal to the percentage of above-average total costs for public-goods provision. This design is best able to deter free-riding and can establish the social optimum as the equilibrium. In the second, the compensation paid to each country is a function of the marginal cost of their public-good provision. Here there are significant incentives to free-ride. In the third case, the monetary resources provided by the fund are fixed, a design frequently encountered in international funds. This design is the one least able to deter free-riding. © 2020 The Author(s)eng
dc.description.versionpublishedVersion
dc.identifier.urihttps://oa.tib.eu/renate/handle/123456789/10542
dc.identifier.urihttp://dx.doi.org/10.34657/9578
dc.language.isoeng
dc.publisherAmsterdam : Elsevier
dc.relation.doihttps://doi.org/10.1016/j.euroecorev.2020.103423
dc.relation.essn1873-572X
dc.relation.ispartofseriesEuropean Economic Review 127 (2020)eng
dc.rights.licenseCC BY 4.0 Unported
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.subjectClimate changeeng
dc.subjectGlobal public goodseng
dc.subjectInternational environmental agreementseng
dc.subjectTransferseng
dc.subject.ddc300
dc.subject.ddc330
dc.titleThe strategic dimension of financing global public goodseng
dc.typearticle
dc.typeText
dcterms.bibliographicCitation.journalTitleEuropean Economic Review
tib.accessRightsopenAccess
wgl.contributorPIK
wgl.subjectUmweltwissenschaftenger
wgl.typeZeitschriftenartikelger
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