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Strategic decentralization and the provision of global public goods

Foucart, Renaud; Wan, Cheng

Authors

Renaud Foucart

Cheng Wan



Abstract

We study strategic decentralization in the provision of a global public good. A federation, with the aim of maximizing the aggregate utility of its members, may find it advantageous to decentralize the decision-making, so that its members act autonomously to maximize their own utility. If utility is fully transferable within a federation, the larger a federation is or the more sensitive it is to the public good, the more it has incentives to remain centralized. If an overall increase in the sensitivity to the public good induces some federation(s) to decentralize, it may lead to a decrease in the aggregate provision. With non-transferable utility within a federation, those members that are smaller or less sensitive to the public good are more likely to prefer decentralization. Some members within a federation becoming more sensitive to the public good may thus lead to a lower aggregate provision, because the increased heterogeneity of the federation makes it more inclined to decentralize.

Journal Article Type Article
Journal Journal of Environmental Economics and Management
Print ISSN 0095-0696
Electronic ISSN 0095-0696
Publisher Elsevier
Peer Reviewed Peer Reviewed
APA6 Citation Foucart, R., & Wan, C. (in press). Strategic decentralization and the provision of global public goods. Journal of Environmental Economics and Management, doi:10.1016/j.jeem.2017.08.006
DOI https://doi.org/10.1016/j.jeem.2017.08.006
Keywords Global public goods; Decentralization; Delegation
Publisher URL https://doi.org/10.1016/j.jeem.2017.08.006
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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