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A Mechanism for Addressing Compliance and Participation in Global Public Good Treaties: A Comment

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  • Michael Finus

    (University of Graz, Austria)

Abstract

Kornek and Edenhofer (2020) propose a transfer scheme in the spirit of mechanism design in a two-stage coalition formation game. Not only non-signatories but also signatories choose their provision levels non-cooperatively. They show that the grand coalition is stable, implementing the socially optimal provision level. McEvoy and McGinty (2023) argue in a comment that this scheme is flawed as it does not address free-riding in the sense of non-compliance. I offer a solution to the problem highlighted by McEvoy and McGinty (2023), proposing a modification of the original set-up which addresses both dimensions of free-riding. I demonstrate that the scheme also works for asymmetric countries.

Suggested Citation

  • Michael Finus, 2024. "A Mechanism for Addressing Compliance and Participation in Global Public Good Treaties: A Comment," Graz Economics Papers 2024-14, University of Graz, Department of Economics.
    • Handle: RePEc:grz:wpaper:2024-14
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    References listed on IDEAS

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    1. Wolfgang Buchholz & Todd Sandler, 2021. "Global Public Goods: A Survey," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 488-545, June.
    2. McEvoy, David M. & McGinty, Matthew, 2023. "The problem of financing global public goods," European Economic Review, Elsevier, vol. 153(C).
    3. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    4. Kornek, Ulrike & Edenhofer, Ottmar, 2020. "The strategic dimension of financing global public goods," European Economic Review, Elsevier, vol. 127(C).
    5. Michael Finus & Bianca Rundshagen, 2009. "Membership rules and stability of coalition structures in positive externality games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 389-406, March.
    6. Alfred Endres & Michael Finus, 2002. "Quotas May Beat Taxes in a Global Emission Game," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(6), pages 687-707, November.
    7. Haeringer, Guillaume, 2004. "Equilibrium binding agreements: a comment," Journal of Economic Theory, Elsevier, vol. 117(1), pages 140-143, July.
    8. Michael Finus & Alejandro Caparrós (ed.), 2015. "Game Theory and International Environmental Cooperation," Books, Edward Elgar Publishing, number 15345, June.
    9. Geir Asheim & Bjart Holtsmark, 2009. "Renegotiation-Proof Climate Agreements with Full Participation: Conditions for Pareto-Efficiency," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(4), pages 519-533, August.
    10. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
    11. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.
    12. Pavlova, Yulia & de Zeeuw, Aart, 2013. "Asymmetries in international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 18(1), pages 51-68, February.
    13. Gerber, Anke & Wichardt, Philipp C., 2009. "Providing public goods in the absence of strong institutions," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 429-439, April.
    14. Bayramoglu, Basak & Finus, Michael & Jacques, Jean-François, 2018. "Climate agreements in a mitigation-adaptation game," Journal of Public Economics, Elsevier, vol. 165(C), pages 101-113.
    15. Anke Gerber & Philipp Wichardt, 2013. "On the Private Provision of Intertemporal Public Goods with Stock Effects," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 55(2), pages 245-255, June.
    16. Hans‐Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
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    18. Parkash Chander & Henry Tulkens, 2006. "Theoretical Foundations of Negotiations and Cost Sharing in Transfrontier Pollution Problems," Springer Books, in: Parkash Chander & Jacques Drèze & C. Knox Lovell & Jack Mintz (ed.), Public goods, environmental externalities and fiscal competition, chapter 0, pages 123-134, Springer.
    19. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
    20. El-Sayed, Abeer & Rubio, Santiago J., 2014. "Sharing R&D investments in cleaner technologies to mitigate climate change," Resource and Energy Economics, Elsevier, vol. 38(C), pages 168-180.
    21. Michael Finus & Bianca Rundshagen, 1998. "Renegotiation–Proof Equilibria in a Global Emission Game When Players Are Impatient," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(3), pages 275-306, October.
    22. 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.
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    Keywords

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    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General
    • 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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