[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/eid/wpaper/58129.html
   My bibliography  Save this paper

Public Good Agreements under the Weakest-link Technology

Author

Listed:
  • Alejandro Caparros

    (Consejo Superior de Investigaciones Científicas)

  • Michael Finus

    (University of Bath)

Abstract
We analyze the formation of public good agreements under the weakest-link technol-ogy. Cooperation on migration policies, money laundering measures and biodiversityconservation e§orts are prime examples of this technology. Whereas for symmetricplayers, policy coordination is not necessary, for asymmetric players cooperation mat-ters but fails, in the absence of transfers. In contrast, with an optimal transfer scheme,asymmetry may not be an obstacle but an asset for cooperation. Counterintuitively, avery skewed distribution of interests may allow even the grand coalition being stable.We characterize various types and degrees of asymmetry and relate them to the stabil-ity of agreements and associate gains from cooperation. We compare our results withthose obtained under the well-known summation technology and demonstrate that theycan be derived under much more general conditions.

Suggested Citation

  • Alejandro Caparros & Michael Finus, 2016. "Public Good Agreements under the Weakest-link Technology," Department of Economics Working Papers 52/16, University of Bath, Department of Economics.
    • Handle: RePEc:eid:wpaper:58129
    as

    Download full text from publisher

    File URL: https://purehost.bath.ac.uk/ws/files/158166330/public_good_agreements_weakest_link_technology.pdf
    File Function: Final published version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Scott Barrett, 2002. "Consensus Treaties," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 529-547, December.
    2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    3. Effrosyni Diamantoudi & Eftichios S. Sartzetakis, 2006. "Stable International Environmental Agreements: An Analytical Approach," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 8(2), pages 247-263, May.
    4. Todd Sandler & Daniel G Arce M, 2002. "A conceptual framework for understanding global and transnational public goods for health," Fiscal Studies, Institute for Fiscal Studies, vol. 23(2), pages 195-222, June.
    5. Michael Finus & Alejandro Caparrós (ed.), 2015. "Game Theory and International Environmental Cooperation," Books, Edward Elgar Publishing, number 15345.
    6. Richard Cornes, 1993. "Dyke Maintenance and Other Stories: Some Neglected Types of Public Goods," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(1), pages 259-271.
    7. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, September.
    8. Marco Battaglini & Bård Harstad, 2016. "Participation and Duration of Environmental Agreements," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 160-204.
    9. Van Huyck, John B & Battalio, Raymond C & Beil, Richard O, 1990. "Tacit Coordination Games, Strategic Uncertainty, and Coordination Failure," American Economic Review, American Economic Association, vol. 80(1), pages 234-248, March.
    10. Michael Finus & Stefan Maus, 2008. "Modesty May Pay!," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 10(5), pages 801-826, October.
    11. Bergstrom, Ted C. & Blume, Larry & Varian, Hal, 1992. "Uniqueness of Nash equilibrium in private provision of public goods : An improved proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 391-392, December.
    12. Debraj Ray & Rajiv Vohra, 2001. "Coalitional Power and Public Goods," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1355-1384, December.
    13. Barrett, Scott, 1994. "Self-Enforcing International Environmental Agreements," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 878-894, Supplemen.
    14. Alejandro Caparrós & Eric Giraud-Héraud & Abdelhakim Hammoudi & Tarik Tazdaït, 2011. "Coalition Stability with Heterogeneous Agents," Economics Bulletin, AccessEcon, vol. 31(1), pages 286-296.
    15. Carlo Carraro (ed.), 2003. "The Endogenous Formation of Economic Coalitions," Books, Edward Elgar Publishing, number 2999.
    16. Shimon Kogan & Anthony M. Kwasnica & Roberto A. Weber, 2011. "Coordination in the Presence of Asset Markets," American Economic Review, American Economic Association, vol. 101(2), pages 927-947, April.
    17. Cornes, Richard & Hartley, Roger, 2007. "Weak links, good shots and other public good games: Building on BBV," Journal of Public Economics, Elsevier, vol. 91(9), pages 1684-1707, September.
    18. Pavlova, Yulia & de Zeeuw, Aart, 2013. "Asymmetries in international environmental agreements," Environment and Development Economics, Cambridge University Press, vol. 18(1), pages 51-68, February.
    19. Johan Eyckmans & Michael Finus, 2004. "An Almost Ideal Sharing Scheme for Coalition Games with Externalities," Energy, Transport and Environment Working Papers Series ete0414, KU Leuven, Department of Economics - Research Group Energy, Transport and Environment.
    20. Pierre Courtois & Guillaume Haeringer, 2012. "Environmental cooperation: ratifying second-best agreements," Public Choice, Springer, vol. 151(3), pages 565-584, June.
    21. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
    22. Alejandro Caparrós & Michael Finus, 2020. "Public good agreements under the weakest‐link technology," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 555-582, June.
    23. Hans‐Peter Weikard, 2009. "Cartel Stability Under An Optimal Sharing Rule," Manchester School, University of Manchester, vol. 77(5), pages 575-593, September.
    24. Eyckmans, Johan & Finus, Michael & Mallozzi, Lina, 2011. "A New Class of Welfare Maximizing Stable Sharing Rules for Partition Function Games with Externalities," Working Papers 2011/08, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    25. Anderson, Simon P. & Goeree, Jacob K. & Holt, Charles A., 2001. "Minimum-Effort Coordination Games: Stochastic Potential and Logit Equilibrium," Games and Economic Behavior, Elsevier, vol. 34(2), pages 177-199, February.
    26. Vicary, Simon & Sandler, Todd, 2002. "Weakest-link public goods: Giving in-kind or transferring money," European Economic Review, Elsevier, vol. 46(8), pages 1501-1520, September.
    27. Santiago J. Rubio & Alistair Ulph, 2006. "Self-enforcing international environmental agreements revisited," Oxford Economic Papers, Oxford University Press, vol. 58(2), pages 233-263, April.
    28. Harrison, Glenn W & Hirshleifer, Jack, 1989. "An Experimental Evaluation of Weakest Link/Best Shot Models of Public Goods," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 201-225, February.
    29. Matthew McGinty, 2007. "International environmental agreements among asymmetric nations," Oxford Economic Papers, Oxford University Press, vol. 59(1), pages 45-62, January.
    30. Jordi Brandts & David J. Cooper, 2006. "A Change Would Do You Good .... An Experimental Study on How to Overcome Coordination Failure in Organizations," American Economic Review, American Economic Association, vol. 96(3), pages 669-693, June.
    31. Fraser, Clive D., 1992. "The uniqueness of Nash equilibrium in the private provision of public goods : An alternative proof," Journal of Public Economics, Elsevier, vol. 49(3), pages 389-390, December.
    32. Claude d'Aspremont & Alexis Jacquemin & Jean Jaskold Gabszewicz & John A. Weymark, 1983. "On the Stability of Collusive Price Leadership," Canadian Journal of Economics, Canadian Economics Association, vol. 16(1), pages 17-25, February.
    33. Todd Sandler, 1998. "Global and regional public goods: a prognosis for collective action," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 221-247, August.
    34. Francis Bloch, 2003. "Non-cooperative models of coalition formation in games with spillovers," Chapters, in: Carlo Carraro (ed.), The Endogenous Formation of Economic Coalitions, chapter 2, Edward Elgar Publishing.
    35. Michael Finus & Bianca Rundshagen, 2009. "Membership rules and stability of coalition structures in positive externality games," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(3), pages 389-406, March.
    36. Fuentes-Albero, Cristina & Rubio, Santiago J., 2010. "Can international environmental cooperation be bought?," European Journal of Operational Research, Elsevier, vol. 202(1), pages 255-264, April.
    37. Roberto A. Weber, 2006. "Managing Growth to Achieve Efficient Coordination in Large Groups," American Economic Review, American Economic Association, vol. 96(1), pages 114-126, March.
    38. Carraro, Carlo & Siniscalco, Domenico, 1993. "Strategies for the international protection of the environment," Journal of Public Economics, Elsevier, vol. 52(3), pages 309-328, October.
    39. Weifeng Liu, 2018. "Global public goods and coalition formation under matching mechanisms," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(3), pages 325-355, June.
    40. Sandler,Todd, 2004. "Global Collective Action," Cambridge Books, Cambridge University Press, number 9780521834773, September.
    41. Arce M, Daniel G, 2001. "Leadership and the Aggregation of International Collective Action," Oxford Economic Papers, Oxford University Press, vol. 53(1), pages 114-137, January.
    42. Vicary, Simon, 1990. "Transfers and the weakest-link : An extension of Hirshleifer's analysis," Journal of Public Economics, Elsevier, vol. 43(3), pages 375-394, December.
    43. Sandler,Todd, 2004. "Global Collective Action," Cambridge Books, Cambridge University Press, number 9780521542548, September.
    44. Arce M., Daniel G. & Sandler, Todd, 2001. "Transnational public goods: strategies and institutions," European Journal of Political Economy, Elsevier, vol. 17(3), pages 493-516, September.
    45. Yi, Sang-Seung, 1997. "Stable Coalition Structures with Externalities," Games and Economic Behavior, Elsevier, vol. 20(2), pages 201-237, August.
    46. Gérard P. Cachon & Colin F. Camerer, 1996. "Loss-Avoidance and Forward Induction in Experimental Coordination Games," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 165-194.
    47. Jack Hirshleifer, 1983. "From weakest-link to best-shot: The voluntary provision of public goods," Public Choice, Springer, vol. 41(3), pages 371-386, January.
    48. Todd Sandler, 2006. "Regional public goods and international organizations," The Review of International Organizations, Springer, vol. 1(1), pages 5-25, March.
    49. Barrett, Scott, 2001. "International cooperation for sale," European Economic Review, Elsevier, vol. 45(10), pages 1835-1850, December.
    50. Monderer, Dov & Shapley, Lloyd S., 1996. "Potential Games," Games and Economic Behavior, Elsevier, vol. 14(1), pages 124-143, May.
    51. Pierre Courtois & Guillaume Haeringer, 2012. "Erratum to: Environmental cooperation: ratifying second-best agreements," Public Choice, Springer, vol. 153(1), pages 261-261, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert J. R. Elliott & Ingmar Schumacher & Cees Withagen, 2020. "Suggestions for a Covid-19 Post-Pandemic Research Agenda in Environmental Economics," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 1187-1213, August.
    2. Alejandro Caparrós & Michael Finus, 2020. "Public good agreements under the weakest‐link technology," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 555-582, June.
    3. Alejandro Caparrós & Esther Blanco & Philipp Buchenauer & Michael Finus, 2020. "Team Formation in Coordination Games with Fixed Neighborhoods," Working Papers 2004, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    4. Stefano Barbieri & Iryna Topolyan, 2021. "Private‐information group contests with complementarities," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(5), pages 772-800, October.
    5. Gilbert Kollenbach, 2022. "International Environmental Agreements and Black Technology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(3), pages 601-624, July.
    6. Fredrik Carlsson & Claes Ek & Andreas Lange, 2021. "All It Takes Is One: The Effect of Weakest-Link and Summation Aggregation on Public Good Provision under Threshold Uncertainty," CESifo Working Paper Series 9457, CESifo.
    7. Alejandro Caparrós & Michael Finus, 2020. "The Corona-Pandemic: A Game-Theoretic Perspective on Regional and Global Governance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 913-927, August.
    8. Fredrik Carlsson & Claes Ek & Andreas Lange, 2024. "One bad apple spoils the barrel? Public good provision under threshold uncertainty," Experimental Economics, Springer;Economic Science Association, vol. 27(3), pages 664-686, July.
    9. Irina Bakalova & Mariia Belaia, 2023. "Stability of Efficient International Agreements on Solar Geoengineering," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(3), pages 673-712, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Finus, Michael & Pintassilgo, Pedro, 2013. "The role of uncertainty and learning for the success of international climate agreements," Journal of Public Economics, Elsevier, vol. 103(C), pages 29-43.
    2. Bayramoglu, Basak & Finus, Michael & Jacques, Jean-François, 2018. "Climate agreements in a mitigation-adaptation game," Journal of Public Economics, Elsevier, vol. 165(C), pages 101-113.
    3. Alejandro Caparrós & Michael Finus, 2020. "The Corona-Pandemic: A Game-Theoretic Perspective on Regional and Global Governance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 76(4), pages 913-927, August.
    4. Cornes, Richard & Hartley, Roger, 2007. "Weak links, good shots and other public good games: Building on BBV," Journal of Public Economics, Elsevier, vol. 91(9), pages 1684-1707, September.
    5. Bakalova, Irina & Eyckmans, Johan, 2019. "Simulating the impact of heterogeneity on stability and effectiveness of international environmental agreements," European Journal of Operational Research, Elsevier, vol. 277(3), pages 1151-1162.
    6. Erik Ansink & Cees A. Withagen, 2016. "Members, Joiners, Free-Riders, Supporters," CESifo Working Paper Series 5802, CESifo.
    7. Matthew McGinty, 2020. "Leadership and Free-Riding: Decomposing and Explaining the Paradox of Cooperation in International Environmental Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(2), pages 449-474, October.
    8. Lassi Ahlvik & Yulia Pavlova, 2013. "A Strategic Analysis of Eutrophication Abatement in the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 353-378, November.
    9. Achim Hagen & Klaus Eisenack, 2019. "Climate Clubs Versus Single Coalitions: The Ambition Of International Environmental Agreements," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 10(03), pages 1-19, August.
    10. Todd Sandler & Daniel G. Arce, 2007. "New face of development assistance: public goods and changing ethics," Journal of International Development, John Wiley & Sons, Ltd., vol. 19(4), pages 527-544.
    11. Finus, Michael & McGinty, Matthew, 2019. "The anti-paradox of cooperation: Diversity may pay!," Journal of Economic Behavior & Organization, Elsevier, vol. 157(C), pages 541-559.
    12. Jon Hovi & Hugh Ward & Frank Grundig, 2015. "Hope or Despair? Formal Models of Climate Cooperation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 665-688, December.
    13. Michael Finus & Pedro Pintassilgo, 2012. "International environmental agreements under uncertainty: does the 'veil of uncertainty' help?," Oxford Economic Papers, Oxford University Press, vol. 64(4), pages 736-764, October.
    14. Hans-Peter Weikard & Leo Wangler & Andreas Freytag, 2015. "Minimum Participation Rules with Heterogeneous Countries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(4), pages 711-727, December.
    15. Carlo Carraro, 2014. "International environmental cooperation," Chapters, in: Giles Atkinson & Simon Dietz & Eric Neumayer & Matthew Agarwala (ed.), Handbook of Sustainable Development, chapter 26, pages 418-431, Edward Elgar Publishing.
    16. Ansink, Erik & Weikard, Hans-Peter & Withagen, Cees, 2019. "International environmental agreements with support," Journal of Environmental Economics and Management, Elsevier, vol. 97(C), pages 241-252.
    17. Alejandro Caparrós & Jean-Christophe Péreau, 2017. "Multilateral versus sequential negotiations over climate change," Oxford Economic Papers, Oxford University Press, vol. 69(2), pages 365-387.
    18. Irene Alvarado-Quesada & Hans-Peter Weikard, 2017. "International Environmental Agreements for biodiversity conservation: a game-theoretic analysis," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(5), pages 731-754, October.
    19. Karp, Larry & Simon, Leo, 2013. "Participation games and international environmental agreements: A non-parametric model," Journal of Environmental Economics and Management, Elsevier, vol. 65(2), pages 326-344.
    20. Subhasish M. Chowdhury & Dongryul Lee & Iryna Topolyan, 2013. "The Max-Min Group Contest," University of East Anglia Applied and Financial Economics Working Paper Series 050, School of Economics, University of East Anglia, Norwich, UK..

    More about this item

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eid:wpaper:58129. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Scholarly Communications Librarian (email available below). General contact details of provider: https://edirc.repec.org/data/debatuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.