Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/26103 
Year of Publication: 
2007
Series/Report no.: 
CESifo Working Paper No. 2058
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
An effective policy scheme to overcome the suboptimal low provision levels of global public goods is developed in this paper. By suggesting a decentralized approach to raise environmental public good provision levels we take account of the lack of a coercive global authority that is able to enforce efficient international environmental regulations. In our model individual regions voluntarily commence international negotiations on public good provision, which are accompanied by side-payments. These side-payments are financed by means of regional externality-correcting taxes. Side-payments and national tax rates are designed in a mutually dependent way. The decentralized scheme we recommend for approaching Pareto efficient Nash equilibria is based on the ideas of Coasean negotiations and Pigouvian taxes. As it is implementable for a wide class of Nash solutions, it is applicable to various international externality problems.
JEL: 
F35
H23
Document Type: 
Working Paper
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