Collective Action in an Asymmetric World

Cuicui Chen and Richard Zeckhauser
Additional contact information
Cuicui Chen: Harvard University

Working Paper Series from Harvard University, John F. Kennedy School of Government

Abstract: A central authority possessing tax and expenditure responsibilities can readily provide an efficient level of a public good. Absent a central authority, the case with climate change mitigation, voluntary arrangements must replace coercive arrangements; significant under-provision must be expected. Potential contributors have strong incentives to free ride, or to ride cheaply. International public goods are particularly challenging. The players--the nations of the world--are many and they start in quite different circumstances. Voluntary arrangements that might emerge from negotiations fall short for two reasons: First, players frame negotiations from their own standpoint, making stalemate likely. Second, the focal-point solution where contributions are proportional to benefits clashes with the disproportionate incentives little players have to ride cheaply. We identify a solution, the Cheap-Riding Efficient Equilibrium, which defines the relative contributions of players of differing size (or preference intensity) to reflect cheap riding incentives, yet still achieves Pareto optimality. Players start by establishing the Alliance/Nash Equilibrium as a base point. From that point they apply either the principles of the Lindahl Equilibrium or the Nash Bargaining Solution to proceed to the Pareto frontier. The former benefits from its focal-point properties; the latter is a standard analytic tool addressing bargaining. We apply our theory to climate change by first examining the Nordhaus Climate Club proposal. We then test the Alliance Equilibrium model using individual nations' Intended Nationally Determined Contributions pledged at the Paris Climate Change Conference. As hypothesized, larger nations made much larger pledges in proportion to their Gross National Incomes.

JEL-codes: C72 F53 H87 (search for similar items in EconPapers)
Date: 2016-04
New Economics Papers: this item is included in nep-cdm and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://research.hks.harvard.edu/publications/getFile.aspx?Id=1335

Related works:
Journal Article: Collective action in an asymmetric world (2018)
Working Paper: Collective Action in an Asymmetric World (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:harjfk:16-019

Access Statistics for this paper

More papers in Working Paper Series from Harvard University, John F. Kennedy School of Government Contact information at EDIRC.
Bibliographic data for series maintained by ().