 A paradox of coalition building in public good provisionWolfgang Buchholz and Keisuke Hattori Economic Modelling, 2024, vol. 135, issue C Abstract: Does partial coalition among players help mitigate the issue of underprovision of public goods? This study considers endogenous coalition formation and endogenous technology choices in a model of the private provision of global public goods. We show that the possibility of future interstate (partial) coordination may hinder the current adoption of better technology by a country outside the cooperation, which may exacerbate an existing underprovision problem. Specifically, in the subgame perfect equilibrium of a three-stage game, we find two paradoxical results: the inability to form future partial coalitions encourages a country outside the cooperation to adopt better technology, which could lead to an increase in the total public good supply and an improvement of global welfare. These results have important policy implications. For example, in the context of the Paris Agreement, if a major country announces reduced nationally determined contributions in a strategic move to adopt less advanced technology to motivate other countries to form coalitions, it may ultimately lead to a decrease in the overall supply of public goods and global welfare. Keywords: Coalition formation; Public goods; Endogenous technology; Environmental agreements (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:135:y:2024:i:c:s0264999324000786 DOI: 10.1016/j.econmod.2024.106722 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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