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Policies to Internalize Reciprocal International Spillovers

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  • Martin Altemeyer-Bartscher
  • Dirk T. G. Rübbelke
  • Eytan Sheshinski

Abstract

An effective policy scheme to overcome the suboptimal low provision levels of global public goods is developed in this paper. By suggesting a decentralized approach to raise environmental public good provision levels we take account of the lack of a coercive global authority that is able to enforce efficient international environmental regulations. In our model individual regions voluntarily commence international negotiations on public good provision, which are accompanied by side-payments. These side-payments are financed by means of regional externality-correcting taxes. Side-payments and national tax rates are designed in a mutually dependent way. The decentralized scheme we recommend for approaching Pareto efficient Nash equilibria is based on the ideas of Coasean negotiations and Pigouvian taxes. As it is implementable for a wide class of Nash solutions, it is applicable to various international externality problems.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2007/wp-cesifo-2007-07/cesifo1_wp2058.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2058.

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Date of creation: 2007
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Handle: RePEc:ces:ceswps:_2058

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Related research

Keywords: transfers; environmental taxation;

References

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  1. Sheshinski, Eytan & Green, Jerry, 1976. "Direct Versus Indirect Remedies for Externalities," Scholarly Articles 3204666, Harvard University Department of Economics.
  2. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
  3. Althammer, Wilhelm & Buchholz, Wolfgang, 1993. "Lindahl-equilibria as the outcome of a non-cooperative game : A reconsideration," European Journal of Political Economy, Elsevier, vol. 9(3), pages 399-405, August.
  4. Guttman, Joel M, 1987. "A Non-Cournot Model of Voluntary Collective Action," Economica, London School of Economics and Political Science, vol. 54(213), pages 1-19, February.
  5. John Stranlund, 1996. "On the strategic potential of technological aid in international environmental relations," Journal of Economics, Springer, vol. 64(1), pages 1-22, February.
  6. Buchholz, Wolfgang & Konrad, Kai A., 1995. "Strategic transfers and private provision of public goods," Journal of Public Economics, Elsevier, vol. 57(3), pages 489-505, July.
  7. Schelling, Thomas C, 1992. "Some Economics of Global Warming," American Economic Review, American Economic Association, vol. 82(1), pages 1-14, March.
  8. Guttman, Joel M, 1978. "Understanding Collective Action: Matching Behavior," American Economic Review, American Economic Association, vol. 68(2), pages 251-55, May.
  9. William D. Nordhaus, 2006. "After Kyoto: Alternative Mechanisms to Control Global Warming," American Economic Review, American Economic Association, vol. 96(2), pages 31-34, May.
  10. Danziger, Leif & Schnytzer, Adi, 1991. "Implementing the Lindahl voluntary-exchange mechanism," European Journal of Political Economy, Elsevier, vol. 7(1), pages 55-64, April.
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Cited by:
  1. Bas, Maria & Ledezma, Ivan, 2007. "Market Access and the Evolution of within Plant Productivity in Chile," Economics Papers from University Paris Dauphine 123456789/6913, Paris Dauphine University.

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