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Title:Potentially harmful international cooperation on global public good provision PDF Logo
Authors:Buchholz, Wolfgang
Cornes, Richard
Rübbelke, Dirk
Issue Date:2012
Series/Report no.:CESifo Working Paper: Resource and Environment Economics 3891
Abstract:Recent international climate negotiations suggest that complete agreements are unlikely to materialize. Instead, partial cooperation between like-minded countries appears a more likely outcome. In this paper we analyze the effects of such partial cooperation between like-minded countries. In doing so, we link the literature on partial cooperation with so-called matching approaches. Matching schemes are regarded as providing a promising approach to overcome undersupply of public goods like climate protection. The functioning of matching mechanisms in a setting with an incomplete agreement, i.e. a contract where only a subset of the players participates, has however not been investigated yet. This paper fills this research gap by analyzing incomplete matching agreements in the context of international climate protection. We analyse their effect on both welfare and the global climate protection level. We show that matching coalitions may bring about a decline in global public good provision and a reduction in the welfare of outsiders.
Subjects:coalition formation
public goods
matching
Pareto optimality
partial cooperation
JEL:C78
H41
Q54
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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