Equity as a Prerequisite for Stability of Cooperation on Global Public Good Provision

Wolfgang Buchholz (), Alexander Haupt () and Wolfgang Peters ()
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Wolfgang Peters: European University Viadrina

Environmental & Resource Economics, 2016, vol. 65, issue 1, No 4, 78 pages

Abstract: Abstract Analysing cooperative provision of a global public good such as climate protection, we explore the relationship between equitable burden sharing on the one hand and core stability on the other. To assess the size of the burden which a public good contribution entails for a country, we make use of a specific measure based on Moulin (Econometrica 55:963–977, 1987). In particular, we show that a Pareto optimal allocation which is not in the core can always be blocked by a group of countries with the highest Moulin sacrifices. In this sense, it is the ‘overburdening’ and thus ‘unfair’ treatment of some countries that provides the reason for core instability. By contrast, a Pareto optimal allocation is in the core if the public good contributions are fairly equally distributed according to their Moulin sacrifices. The potential implications of our theoretical analysis for global climate policy are also discussed.

Keywords: Public goods; Core; Equity; Stability of cooperation (search for similar items in EconPapers)
JEL-codes: C71 D63 H41 (search for similar items in EconPapers)
Date: 2016
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Working Paper: Equity as a Prerequisite for Stability of Cooperation on Global Public Good Provision (2014)
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DOI: 10.1007/s10640-015-9907-z

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