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International Tax and Public Finance

, Volume 24, Issue 1, pp 96–111 | Cite as

Strategic delegation when public inputs for a global good are imperfect substitutes

  • Yukihiro Nishimura
  • Kimiko Terai
Article

Abstract

This paper explores the outcome of non-cooperative decision making by elected politicians under transnational externalities. In each country, the delegate (the government) is elected by means of majority voting. Thereafter, delegates of each country choose their environmental policy, which becomes a public input to the global common good. In equilibrium, the median voter deliberately elects a delegate whose preferences differ from his/her own, to pursue advantages in international decision making. In this paper we use the social composition function to capture various cases of environmental problems with complementarity (imperfect substitutability). Our analysis shows the following results: with sufficient complementarity of the public inputs, strategic delegation can lead to the delegation of decisions to a “greener” politician. However, with almost perfect substitutability of public inputs, the only equilibria may involve asymmetric provision of public inputs to the global common good, even if the countries are identical.

Keywords

Environmental policy Transnational externalities Strategic delegation Complementarity 

JEL Classification

D62 D72 D78 Q58 

Notes

Acknowledgments

The authors wish to thank the Editor-in-Chief (Andreas Haufler) and an anonymous referee for their useful comments. The authors also greatly value the comments and discussions by Robin Boadway, Keisuke Hattori, Michihiro Kandori, Daisuke Oyama, Akiomi Kitagawa, Akihiko Yanase, Koki Oikawa, and David Hugh-Jones. In addition, the proofreading services by Edanz and Mr. Philip Morgan are thankfully acknowledged. The usual disclaimer applies. Nishimura acknowledges the financial support from the Grants-in-Aid for Scientific Research (C) from the Ministry of Education, Culture, Sports, Science, and Technology (24530348, 15K03511) and Strategic Young Researcher Overseas Visits Program for Accelerating Brain Circulation from Japan Society for the Promotion of Science (J2402). Terai acknowledges the financial support from the Grants-in-Aid for Scientific Research (C) from the Ministry of Education, Culture, Sports, Science, and Technology (23530382) and the Research Grant from Zengin Foundation for Studies on Economics and Finance.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  1. 1.Graduate School of EconomicsOsaka UniversityOsakaJapan
  2. 2.Faculty of EconomicsKeio UniversityTokyoJapan

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