Risk pooling in redistributive agreements
We study redistributive agreements designed collectively by individual and independent states for the joint supply of a public good. We specifically model the case of international environmental agreements but our analysis should be equally applicable to other multinational arrangements with redistributive aspects. The basic intuition of the investigated class of mechanisms is that, if part of member GDP is redistributed, then the redistributive resource has lower variance than individual income: a side effect of redistribution is risk-sharing. If, in addition, the sum of contributed parts of individual GDP forms a contest prize pool which returns the contributions as prizes to the participants depending on a relative ranking of public good provision levels, then the mechanism can also implement efficient efforts.
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- Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2001.
"Stable International Environmental Agreements: An Analytical Approach,"
04001, Concordia University, Department of Economics, revised Feb 2003.
- Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, 05.
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"Risk pooling, precautionary saving and consumption growth,"
IFS Working Papers
W99/19, Institute for Fiscal Studies.
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- Béatrice Roussillon & Paul Schweinzer, 2010. "Efficient emissions reduction," The School of Economics Discussion Paper Series 1004, Economics, The University of Manchester.
- Clark, Derek J. & Konrad, Kai A., 2007. "Contests with multi-tasking," Munich Reprints in Economics 22095, University of Munich, Department of Economics.
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