Transnational public goods: strategies and institutions

Abstract

Weaker-link and better-shot public goods are prevalent in examples of transnational collective action. Instances include dike building, atmospheric monitoring, cyberspace virus control, deforestation, disease control, and peacekeeping. This paper analyzes essential game-theoretic features of such public goods, which allow correlated strategies to provide Pareto-improving alternatives to Nash equilibria. Correlation is justified as providing a formal structure for the veil of uncertainty and political leadership. Weaker-link and better-shot public goods differ in terms of the appropriate institutional design. We also consider the consequences of diminishing returns on game forms and institutional prescriptions.JEL classification: H41, D70.

The role of uncertainty and learning for the success of international climate agreements

“…Arce andSandler 2001 andSandler et al 1987) or oligopolies (e.g. Einy et al 2003 andVives 1984), though this is restricted to a non-cooperative setting (Bayesian Nash equilibria).…”

The political economy of (De)centralization with complementary public goods

“…Under decentralization, no public goods are supplied in equilibrium in this case, as shown by (10). 3 1 With = 0, we indeed have that @ẽ B =@ A and @ẽ A =@ A are of opposite signs. This can be seen from equation (A37) in the Appendix.…”

“…For example, in the case of a 'weaker-link'public good, the smallest contribution has the largest marginal impact on the overall level of public good provision but the impact of contributions by others is not equal to zero (due, for example, to di¤erences in the island's topography in Hirshleifer's example). Sandler (1997Sandler ( , 1998) and Arce and Sandler (2001) pointed out that these types of public goods may also be prevalent in many situations involving the provision of 'transnational'public goods stemming from regional public investments, with spillover e¤ects from one region to the other. By way of illustration of transnational 'weaker-link' public goods, they brie ‡y refer to the cases of atmospheric monitoring, cyberspace virus control, disease control or peacekeeping.…”

“…The reason is that voters'preferences are separable in the levels of public spending, thus implying that the two regions' allocations are strategically neutral (even though there exists spillover e¤ects). 3 However, Dur and Roelfsema (2005), in an additional appendix, also consider a 'summation technology'with the public good surplus being given by a (concave) function of the weighed sum of local public goods. 4 This implies that these investments are strategic substitutes and, hence, median voters strategically delegate power to 'conservative'representatives under non-cooperative decision-making.…”

Jack Hirshleifer: A Nobel Prize left unbestowed

“…Conybeare et al (1994) devised an empirical test procedure applied to the Warsaw Pact , NATO (1961NATO ( -1987, the Triple Alliance (1880-1914, best-shot defense public good provided by Germany), and the Triple Entente (1880-1914, Britain as weakest-link). Jack's innovative public good concepts have been applied in policy contexts (Sandler, 1997;Arce M. and Sandler, 2001): weakest-link and best shot are very much on the mind of policy makers concerned with health issues, cyber space virus control, atmospheric monitoring, deforestation, disease control, peacekeeping, pollution, and more. In Hausken (2002), I merged game theory and reliability theory to show that the weakest-link rule applies for a series system, while the best-shot rule applies for a parallel system: specific games are associated with each of these systems.…”