Collective minimum contributions to counteract the ratchet effect in the voluntary provision of public goods

Marius Alt, Carlo Gallier, Martin Kesternich and Bodo Sturm

Journal of Environmental Economics and Management, 2023, vol. 122, issue C

Abstract: We experimentally test a theoretically promising amendment to the ratchet-up mechanism of the Paris Agreement. The ratchet-up mechanism prescribes that parties’ commitments to the global response to climate change cannot decrease over time, and our results show that its effect is detrimental. We design a public goods game to study whether cooperation is promoted by an amendment to the mechanism that stipulates that all agents must contribute at least a collectively chosen minimum based on the principle of the lowest common denominator. We find that binding collective minimum contributions improve the effectiveness of the ratchet-up mechanism. Non-binding minimum contributions, by contrast, do not encourage cooperation. Our data indicate that the difference is attributable to conditional cooperative dynamics. If other participants contribute less than the collective minimum contribution, even initially cooperative participants start to negatively reciprocate this form of non-compliance by contributing less.

Keywords: Global public goods; Climate change; Institutions; Ratchet-up mechanism; Minimum contributions; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C72 C92 H41 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Collective minimum contributions to counteract the ratchet effect in the voluntary provision of public goods (2022)
Working Paper: Collective minimum contributions to counteract the ratchet effect in the voluntary provision of public goods (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:122:y:2023:i:c:s0095069623001134

DOI: 10.1016/j.jeem.2023.102895

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