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Market power and global public goods

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  • Kessing, Sebastian G.

Abstract

A global monopoly supplier country of green goods which are essential for the provision of global environmental public goods optimally subsidizes the export of such goods in an interior contribution equilibrium. This is not counterbalanced by an incentive to improve the terms-of-trade, since any price-induced transfers are off-set by contribution adjustments. By the same logic, a subsidy is costless for the monopoly supplier. The existence of a global monopoly supplier increases global public good supply relative to a competitive setting. The incentive to subsidize persists with impure public goods. Import-dependent countries may also benefit from a monopoly supplier. While they are strategically exploited to increase their contributions to the global public good, they do so at lower costs, and they benefit from increased contributions by the other importer countries.

Suggested Citation

  • Kessing, Sebastian G., 2026. "Market power and global public goods," European Economic Review, Elsevier, vol. 184(C).
    • Handle: RePEc:eee:eecrev:v:184:y:2026:i:c:s0014292126000012
    DOI: 10.1016/j.euroecorev.2026.105257
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    Keywords

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    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • D60 - Microeconomics - - Welfare Economics - - - General
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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