Cross-Border Externalities and Cooperation Among Representative Democracies
| Autor: | Antoine Loeper |
|---|---|
| Rok vydání: | 2016 |
| Předmět: |
Economics and Econometrics
Majority rule Federalism Election International Cooperation Public good Strategic delegation Economía Microeconomics D72 Demand curve 0502 economics and business Economics F55 050207 economics H77 050205 econometrics Price elasticity of demand Public economics 05 social sciences Bargaining power Incentive D62 Coase theorem Externalities Bargaining H41 Finance Externality |
| Zdroj: | e-Archivo. Repositorio Institucional de la Universidad Carlos III de Madrid instname |
| ISSN: | 1556-5068 |
| DOI: | 10.2139/ssrn.2847045 |
| Popis: | This paper analyzes the provision of public goods with cross-border externalities by representative democracies. The level of provision of each country is decided by a policy maker elected by majority rule at the country level. We compare the case in which policy makers set their policies noncooperatively with the case in which they set their policies through Coasian cooperation. Cooperation induces policy makers to internalize cross-border externalities, but it also induces strategic voters to elect a policy maker who cares less about the public good to reduce their public good contribution. The former effect increases public good provision while the latter reduces it. We show that once voters' incentives are taken into account, whether cooperation is beneficial depends neither on voters' preferences, nor on the magnitude of spillovers, nor on the size, bargaining power, or efficiency of each country. Instead, it depends only on the curvature of the demand for the public good: cooperation increases (decreases) public good provision when the demand function is more (less) convex than the unit elastic demand function. Hence, the desirability of international cooperation depends mostly on the type of public good considered. |
| Databáze: | OpenAIRE |
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