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Strategic delegation when public inputs for a global good are imperfect substitutes

Author

Listed:
  • Yukihiro Nishimura

    (Osaka University)

  • Kimiko Terai

    (Keio University)

Abstract

This paper explores the outcome of non-cooperative decision making by elected politicians under transnational externalities. In each country, the delegate (the government) is elected by means of majority voting. Thereafter, delegates of each country choose their environmental policy, which becomes a public input to the global common good. In equilibrium, the median voter deliberately elects a delegate whose preferences differ from his/her own, to pursue advantages in international decision making. In this paper we use the social composition function to capture various cases of environmental problems with complementarity (imperfect substitutability). Our analysis shows the following results: with sufficient complementarity of the public inputs, strategic delegation can lead to the delegation of decisions to a “greener” politician. However, with almost perfect substitutability of public inputs, the only equilibria may involve asymmetric provision of public inputs to the global common good, even if the countries are identical.

Suggested Citation

  • Yukihiro Nishimura & Kimiko Terai, 2017. "Strategic delegation when public inputs for a global good are imperfect substitutes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(1), pages 96-111, February.
    • Handle: RePEc:kap:itaxpf:v:24:y:2017:i:1:d:10.1007_s10797-016-9411-6
    DOI: 10.1007/s10797-016-9411-6
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    References listed on IDEAS

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    Cited by:

    1. Ogawa, Hikaru, 2021. "Partial environmental tax coordination and political delegation," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).

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    More about this item

    Keywords

    Environmental policy; Transnational externalities; Strategic delegation; Complementarity;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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