Environmental public good provision under robust decision making

Konstantinos Angelopoulos, George Economides and Apostolis Philippopoulos

Oxford Economic Papers, 2017, vol. 69, issue 1, 118-142

Abstract: We study public good provision in a two-country dynamic setup with environmental externalities. In this framework, we examine robust decision making under potential misspecification of the process that describes the evolution of the environmental public good. Robust policies, arising from fear of model misspecification, help to correct for the inefficiencies associated with free riding and thus increase the provision of the public good. As a result, there can be welfare gains from robust policies even when the fear of model misspecification proves to be unfounded.

JEL-codes: D81 H23 H41 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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