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Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes

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  • Larry S. Karp

Abstract

Intergenerational altruism and contemporaneous cooperation are both important to the provision of long-lived public goods. Equilibrium climate protection may depend more sensitively on either of these considerations, depending on the type of policy rule one examines. This conclusion is based on a model with n tribes, each with a sequence of overlapping generations. Tribal members discount their and their descendants’ utility at different rates. Agents in the resulting game are indexed by tribal affiliation and the time at which they act. The Markov Perfect equilibrium is found by solving a control problem with a constant discount rate and an endogenous annuity.

Suggested Citation

  • Larry S. Karp, 2012. "Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes," CESifo Working Paper Series 3895, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_3895
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    File URL: http://www.cesifo-group.de/DocDL/cesifo1_wp3895.pdf
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    References listed on IDEAS

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    1. Saez-Marti, Maria & Weibull, Jorgen W., 2005. "Discounting and altruism to future decision-makers," Journal of Economic Theory, Elsevier, vol. 122(2), pages 254-266, June.
    2. Sumaila, Ussif R. & Walters, Carl, 2005. "Intergenerational discounting: a new intuitive approach," Ecological Economics, Elsevier, vol. 52(2), pages 135-142, January.
    3. Maik T. Schneider & Christian Traeger & Ralph Winkler, 2010. "Trading Off Generations: Infinitely-Lived Agent Versus OLG," Diskussionsschriften dp1007, Universitaet Bern, Departement Volkswirtschaft.
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    5. Christian Traeger, 2014. "Why uncertainty matters: discounting under intertemporal risk aversion and ambiguity," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 56(3), pages 627-664, August.
    6. Reyer Gerlagh, 2012. "Carbon Prices for the Next Thousand Years," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, August.
    7. Frederick Ploeg & Aart Zeeuw, 1992. "International aspects of pollution control," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(2), pages 117-139, March.
    8. Karp, Larry & Zhang, Jiangfeng, 2006. "Regulation with anticipated learning about environmental damages," Journal of Environmental Economics and Management, Elsevier, vol. 51(3), pages 259-279, May.
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    11. repec:hrv:faseco:33373345 is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    overlapping generations; altruism; time consistency; Markov Perfection; differential games; climate policy;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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