Governance on Multiple Global Public Goods

We study the voluntary provision of two pure global public goods with a summation technology in a two-stage coalition formation game. Signatories may cooperate on only one public good (a partial agreement) or on both public goods (a full agreement). In the single-public-good case, provision levels across countries are strategic substitutes and stable agreements tend to be small, yielding only limited improvements over the non-cooperative outcome. One reason is that outsiders benefit from coalition expansion: as signatories increase their provision levels, non-signatories reduce their contributions. Another reason is that superadditivity may fail, particularly for small coalitions, because many outsiders offset the efforts of signatories. With multiple public goods, the strategic interaction may change fundamentally. Provision levels across countries may become strategic complements, and large, stable, and effective agreements may emerge when the cross derivative of the benefit function with respect to the two public goods is sufficiently large and positive. If the cross derivative is negative, however, the global provision level of one public good may decline as the coalition expands. Moreover, under a partial agreement, the game may become a negative-externality game in which also global welfare declines with coalition size and reaches its minimum in the grand coalition. This may occur when countries cooperate on the public good with lower marginal returns.