The role of research in common pool problems

Olli-Pekka Kuusela and Tuomas Laiho

Journal of Environmental Economics and Management, 2020, vol. 100, issue C

Abstract: Significant amounts of public spending are allocated towards research on climate change, but considerable uncertainties remain. We analyze the strategic role of information acquisition and the determinants of investments in information in a common pool game. In the first stage, countries can acquire a signal about their own environmental damages caused by total emissions. Because signals are public, there are information spillovers between countries. In the second stage, the countries decide how much pollution to emit. We show that there can be an inefficiently high amount of investments in information in the non-cooperative equilibrium compared to the cooperative solution if the countries are risk averse and the expected emissions are sufficiently large. In addition, we analyze what happens if the countries cooperate in one of the stages but not in the other. We show numerically that if the emissions are decided non-cooperatively, countries might agree not to acquire any information at all. But if the emissions levels are decided cooperatively, investments in the non-cooperative equilibrium are always too low.

Keywords: Information acquisition; Common pool; Bayesian learning; Climate change; Investments in research (search for similar items in EconPapers)
JEL-codes: D83 Q53 Q54 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069619300579
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:100:y:2020:i:c:s0095069619300579

DOI: 10.1016/j.jeem.2019.102287

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Catherine Liu ().