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Nested externalities and polycentric institutions: must we wait for global solutions to climate change before taking actions at other scales?


The literature on global climate change has largely ignored the small but positive steps that many public and private actors are taking to reduce greenhouse gas emissions. A global policy is frequently posited as the only strategy needed. It is important to balance the major attention on global solutions as the only strategy for coping with climate change. Positive actions are underway at multiple, smaller scales to start the process of climate change mitigation. Researchers need to understand the strength of polycentric systems where enterprises at multiple levels may complement each other. Building a global regime is a necessity, but encouraging the emergence of a polycentric system starts the process of reducing greenhouse gas emissions and acts as a spur to international regimes to do their part.

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Correspondence to Elinor Ostrom.

Additional information

Thanks to Dan Cole, Eric Coleman, Maria Claudia Lopez, Jimmy Walker, an anonymous reviewer, and the editor of this journal for very useful comments on the earlier draft of this paper and to Patty Lezotte for her excellent editing. Sections of this paper draw on a report that I submitted to the World Bank entitled “A Polycentric Approach for Coping with Climate Change.” Financial support from the National Science Foundation and the MacArthur Foundation is gratefully acknowledged.

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Ostrom, E. Nested externalities and polycentric institutions: must we wait for global solutions to climate change before taking actions at other scales?. Econ Theory 49, 353–369 (2012).

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  • Global public goods
  • Climate policy
  • Collective-action theory

JEL Classification

  • H4
  • Q2