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Potentially Harmful International Cooperation on Global Public Good Provision

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  • Wolfgang Buchholz
  • Richard Cornes
  • Dirk Rübbelke

Abstract

Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In doing so, we link the literature on partial cooperation with so-called matching approaches. Matching schemes are regarded as providing a promising approach to overcome undersupply of public goods like climate protection. The functioning of matching mechanisms in a setting with an incomplete agreement, i.e. a contract where only a subset of the players participates, has however not been investigated yet. This paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection. We analyse their effect on both welfare and the global climate protection level. We show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3891.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3891

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Keywords: coalition formation; public goods; matching; Pareto optimality; partial cooperation;

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Cited by:
  1. Robert Hahn & Robert Ritz, 2014. "Optimal Altruism in Public Good Provision," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 1403, Faculty of Economics, University of Cambridge.
  2. Boadway, Robin & Song, Zhen & Tremblay, Jean-François, 2013. "Non-cooperative pollution control in an inter-jurisdictional setting," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 43(5), pages 783-796.
  3. Fabio Sferra & Massimo Tavoni, 2013. "Endogenous Participation in a Partial Climate Agreement with Open Entry: A Numerical Assessment," Working Papers, Fondazione Eni Enrico Mattei 2013.60, Fondazione Eni Enrico Mattei.
  4. Ngo Van Long, 2014. "The Green Paradox in Open Economies," CESifo Working Paper Series 4639, CESifo Group Munich.

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