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Public Good Agreements under the Weakest-link Technology

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  • Alejandro Caparrós
  • Michael Finus

Abstract

We analyze the formation of public good agreements under the weakest-link technology. Whereas policy coordination is not necessary for symmetric players, it matters for asymmetric players; however, this fails in the absence of transfers. By contrast, with a transfer scheme, asymmetry may be an asset for cooperation. We characterize various types and degrees of asymmetry and relate them to the stability of self-enforcing agreements. Asymmetric distributions of autarky public good provision levels (also representing asymmetric interests in cooperation) that are positively skewed tend to be conducive to the stability of agreements. We show that under such conditions, even a coalition including all players can be stable. However, asymmetries that foster stability (instability) tend to be associated with low (high) gains from cooperation.

Suggested Citation

  • Alejandro Caparrós & Michael Finus, 2019. "Public Good Agreements under the Weakest-link Technology," Working Papers 1902, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    • Handle: RePEc:ipp:wpaper:1902
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    Cited by:

    1. Robert J. R. Elliott & Ingmar Schumacher & Cees Withagen, 2020. "Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 1187-1213, August.
    2. Alejandro Caparrós & Michael Finus, 2020. "Public good agreements under the weakest‐link technology," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 555-582, June.
    3. Alejandro Caparrós & Esther Blanco & Philipp Buchenauer & Michael Finus, 2020. "Team Formation in Coordination Games with Fixed Neighborhoods," Working Papers 2004, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    4. Stefano Barbieri & Iryna Topolyan, 2021. "Private‐information group contests with complementarities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(5), pages 772-800, October.
    5. Gilbert Kollenbach, 2022. "International Environmental Agreements and Black Technology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(3), pages 601-624, July.
    6. Fredrik Carlsson & Claes Ek & Andreas Lange, 2021. "All It Takes Is One: The Effect of Weakest-Link and Summation Aggregation on Public Good Provision under Threshold Uncertainty," CESifo Working Paper Series 9457, CESifo.
    7. Alejandro Caparrós & Michael Finus, 2020. "The Corona-Pandemic: A Game-Theoretic Perspective on Regional and Global Governance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 913-927, August.
    8. Irina Bakalova & Mariia Belaia, 2023. "Stability of Efficient International Agreements on Solar Geoengineering," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 673-712, November.

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    More about this item

    Keywords

    public goods; weakest-link technology; agreement formation;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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