Global public good provision in emergency states: A model of (asymmetric) yardstick competition between rent-seeking governments

Giuseppe Di Liddo and Annalisa Vinella

Socio-Economic Planning Sciences, 2024, vol. 93, issue C

Abstract: In a world with two countries, each governed by rent-seeking politicians, there are two strategies to manage an emergency (say, a pandemic) and provide some innovative (global) public good (say, a vaccination campaign) to citizens: (i) invest in adaptation of an existing technology into a suitable good and purchase it, if available, at a low price; (ii) do nothing and import the good, if available, at a higher price. With media insisting on cross-country performance comparisons, political incumbents running for a new mandate are forced into a yardstick competition mechanism through retrospective voters’ electoral decisions. One would expect them to follow the same strategy. In fact, an equilibrium with strategy diversification arises when the probability of success and/or the net benefits of the investment are relatively high. This scenario is more likely to occur the more patient incumbents are. On the one hand, the investing incumbent is attracted by the prospect of enjoying important savings on good procurement and withdrawals on national export revenues; on the other, the non-investing incumbent focuses opportunistically on the present, as he foresees little to gain in the future. Our findings offer a partial explanation to why one can observe strategy diversification for management of emergencies (such as, the Covid-19 pandemic) in (otherwise) similar countries.

Keywords: Global public good; Investment; Probability of success; Political yardstick competition; Rent seeking; Strategy diversification (search for similar items in EconPapers)
JEL-codes: D72 H51 I18 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:93:y:2024:i:c:s0038012124000958

DOI: 10.1016/j.seps.2024.101896

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