Strategic delegation when public inputs for a global good are imperfect substitutes

Yukihiro Nishimura () and Kimiko Terai ()
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Yukihiro Nishimura: Osaka University
Kimiko Terai: Keio University

International Tax and Public Finance, 2017, vol. 24, issue 1, No 4, 96-111

Abstract: Abstract This paper explores the outcome of non-cooperative decision making by elected politicians under transnational externalities. In each country, the delegate (the government) is elected by means of majority voting. Thereafter, delegates of each country choose their environmental policy, which becomes a public input to the global common good. In equilibrium, the median voter deliberately elects a delegate whose preferences differ from his/her own, to pursue advantages in international decision making. In this paper we use the social composition function to capture various cases of environmental problems with complementarity (imperfect substitutability). Our analysis shows the following results: with sufficient complementarity of the public inputs, strategic delegation can lead to the delegation of decisions to a “greener” politician. However, with almost perfect substitutability of public inputs, the only equilibria may involve asymmetric provision of public inputs to the global common good, even if the countries are identical.

Keywords: Environmental policy; Transnational externalities; Strategic delegation; Complementarity (search for similar items in EconPapers)
JEL-codes: D62 D72 D78 Q58 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s10797-016-9411-6

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