Optimal Provision of Global Public Goods under Uncertainty: Strategic Transfers and Reservations in a Multilateral Treaty Obligation
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This paper studies the formation and management of an international entity forpromoting the provision of global public goods in a setup of international treaties onconcessions and reservations. Based on the so-called Vienna Convention by which therecan be a discrepancy between the original treaty obligation and the ratified one in themulti-lateral treaty implementation, we construct two-stage mechanisms for internationaltreaties on global public goods; the concession stage and the ratification stage withreservations. We explicitly analyze the optimal reservation levels from the optimalmechanism when the countries face asymmetric information on the preference parametersto global public goods. Specifically, we characterize the environments where the optimalmechanism with dominant-strategy incentive-compatibility and ex-post participationconstraintin the literature of mechanism design exists. The result shows that thesophisticatedly calculated transfers in the principal of quid pro quo control theinternational concessions and reservations.
Abstract
This paper studies the formation and management of an international entity forpromoting the provision of global public goods in a setup of international treaties onconcessions and reservations. Based on the so-called Vienna Convention by which therecan be a discrepancy between the original treaty obligation and the ratified one in themulti-lateral treaty implementation, we construct two-stage mechanisms for internationaltreaties on global public goods; the concession stage and the ratification stage withreservations. We explicitly analyze the optimal reservation levels from the optimalmechanism when the countries face asymmetric information on the preference parametersto global public goods. Specifically, we characterize the environments where the optimalmechanism with dominant-strategy incentive-compatibility and ex-post participationconstraintin the literature of mechanism design exists. The result shows that thesophisticatedly calculated transfers in the principal of quid pro quo control theinternational concessions and reservations.
참고문헌 (13)
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