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Advantageous leadership in public good provision: the case of an endogenous contribution technology

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  • Wolfgang Buchholz

    (University of Regensburg
    CESifo Munich)

  • Michael Eichenseer

    (University of Regensburg)

Abstract

From the perspective of standard public good theory the total amount of greenhouse gas mitigation (or public good supply in general) will be lower in a leader–follower (Stackelberg) game than in a simultaneous Nash game so that strategic leadership is disadvantageous for climate policy. We show that this needs no longer be true when the leading country has the option to employ a technology by which it can reduce its abatement costs and thus improve the productivity of its contribution technology. Then both countries also are better off in the Stackelberg game than in the Nash game. Our general result is illustrated by an example with Cobb–Douglas preferences and, finally, an empirical application to global climate policy is briefly discussed.

Suggested Citation

  • Wolfgang Buchholz & Michael Eichenseer, 2019. "Advantageous leadership in public good provision: the case of an endogenous contribution technology," Journal of Economics, Springer, vol. 126(1), pages 1-17, January.
    • Handle: RePEc:kap:jeczfn:v:126:y:2019:i:1:d:10.1007_s00712-018-0613-5
    DOI: 10.1007/s00712-018-0613-5
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    Cited by:

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    More about this item

    Keywords

    Public goods; Leadership; Choice of technology; Climate policy;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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