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Providing global public goods under uncertainty

  • Boucher, Vincent
  • Bramoullé, Yann

We study how uncertainty and risk aversion affect international agreements to supply global public goods. We consider a benchmark model with homogeneous countries and linear payoffs. When countries directly contribute to a public good, uncertainty tends to lower signatories' efforts but may increase participation. Despite risk aversion, uncertainty may improve welfare. In contrast, when countries try to reduce a global public bad, uncertainty tends to increase signatories' efforts and decrease participation. In that case, an ex-ante reduction of uncertainty may have a large positive multiplier effect on welfare.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 94 (2010)
Issue (Month): 9-10 (October)
Pages: 591-603

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Handle: RePEc:eee:pubeco:v:94:y:2010:i:9-10:p:591-603
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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