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Funding International Climate Protection: How to Overcome the Bergstrom Paradox?

In: Climate Finance Theory and Practice

Author

Listed:
  • Wolfgang Buchholz
  • Richard Cornes
  • Wolfgang Peters
  • Dirk Rübbelke

Abstract

In a world where the public good “climate protection” is provided via voluntary contributions, a country may introduce international transfers unilaterally in order to induce other countries to raise their contributions to this public good. With it underprovision of climate protection and inefficiency may be reduced. However, it is not obvious whether both donor and recipient are better off with funding. As in its pure form, funding climate protection only favors the donor (cf. Bergstrom, 1989), an additional instrument needs to restrict donor’s advantages. Such a modified mechanism can be understood as a compromise between two bargaining partners searching for a solution which splits their gains in a fair way.

Suggested Citation

  • Wolfgang Buchholz & Richard Cornes & Wolfgang Peters & Dirk Rübbelke, 2017. "Funding International Climate Protection: How to Overcome the Bergstrom Paradox?," World Scientific Book Chapters, in: Anil Markandya & Ibon Galarraga & Dirk Rübbelke (ed.), Climate Finance Theory and Practice, chapter 10, pages 213-228, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814641814_0010
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