Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/68193
Authors: 
Angelopoulos, Konstantinos
Economides, George
Philippopoulos, Apostolis
Year of Publication: 
2012
Series/Report no.: 
CESifo Working Paper: Public Choice 3996
Abstract: 
In this paper, we study a two-country dynamic setup with environmental externalities and potential model misspecification in relation to this public good. Under model uncertainty, robust policies help to correct the inefficiencies associated with free riding on public good provision, implying that there are welfare benefits from robust policies even when the fear of model misspecification proves to be unfounded. However, the incentive to free ride on the precautionary policies of the other country may discourage the implementation of robust policies, despite their welfare superiority.
Subjects: 
model uncertainty
externalities
robust policies
JEL: 
D81
H23
H41
Document Type: 
Working Paper

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