Session 2 Managing the global commons: The logic of international cooperation and the problem of the free-rider.

Slides:



Advertisements
Similar presentations
Fishery management and interested parties
Advertisements

4. Public Goods.
PUBLIC GOODS AND COMMON RESOURCES
PART 10 Market Failures Markets may fail to generate efficient results due to Monopoly Externalities Public Goods Open Access Markets may also have informational.
Richard Hopper The World Bank UNESCO conference on International Quality Assurance: Globalization and Higher Education October 17-18, 2002 Paris, France.
Lecture 3 Public Goods and Government intervention
Global Public Goods Philipp Aerni. What is a Public Good? Private Good (Rivalrous, Excludable) Private Sector Commodity e.g. Painting, Chocolate Bar,
Social Choice Session 9 Carmen Pasca and John Hey.
Public Goods and Common Resources. By the end of this Section you should be able to: Define and Identify Public Good, Common Resource and Market Failure.
Public Goods Goods that are normally provided by Governments Goods that are not provided by the private market or are insufficiently provided by the private.
Chapter 5 EXTERNALITIES
The assumption of maximizing behavior lies at the heart of economic analysis. Firms are assumed to maximize economic profit. Economic profit is the difference.
Public Goods and Common Property
The Well-being of Nations
PROPERTY RIGHTS. PROPERTY RIGHTS AND MARKET FAILURE.
4. Provision of Public Goods
Lecture 5.
Industry Trends, Supervisory Concerns and The Directors/OFIS Role Addressing Them MCUL Fall Leadership Conference John J. Kolhoff, Assistant Director Michigan.
SOCIAL CAPITAL THE AIMS OF THESE NOTES – Social capital: a controversial concept THREE KEY WORDS – Networks – Trust – Institutions.
Liberalism Central Assumptions and Propositions View of history: progressive change possible – Material: prosperity through technological progress, economic.
Imperfect Competition Oligopoly. Outline  Types of imperfect competition  Oligopoly and its characteristics  Collusion and cartels  Equilibrium for.
3.1. Problems of Market Failures (1)  In reality, no market such a perfectly competitive market. Market tends to be imperfect  Hence, Pareto Efficiency.
Property Right (Bromley) Claim to a benefit stream that a govt. will agree to protect through the assignment of duty to others who may wish to interfere.
Institutions and Environmental Cooperation. Today Types of global environmental problems The role of international institutions (regimes): realist vs.
© 2005 Pearson Education Canada Inc Chapter 18 Asymmetric Information, The Rules of the Game, and Externalities.
Theme 4 - Public Goods Public Economics.
11 Prepared by: Fernando Quijano and Yvonn Quijano © 2004 Prentice Hall Business PublishingPrinciples of Economics, 7/eKarl Case, Ray Fair General Equilibrium.
The Market Economy. Learning Objectives Define Economics and Economic system Define equilibrium price and equilibrium quantity Explain why the price of.
Consumer Behavior & Public Policy Lecture #3 Microeconomics.
11.1 Ch. 11 General Equilibrium and the Efficiency of Perfect Competition.
Spatial Clubs: Anderson Chapter 20. Public versus Private Goods ExcludabilityRival in Consumption.
Collective Action and Collective Decision Making
IR theories: Institutionalism
Manuel Mariño Regional Director International Co-operative Alliance ACI-Américas CORPORATE GOVERNANCE AND CO-OPERATIVES Global Corporate Governance Forum.
American Government and Organization PS1301 Friday, 12 September.
Chapter Public Goods and Common Resources 11. PUBLIC GOODS AND COMMON RESOURCES 2 Introduction We consume many goods without paying: parks, national defense,
process information Coordination of National Statistical Systems Seminar on the Implementation of Fundamental Principles Konrad Pesendorfer.
Lecture 13 Externalities, public goods, common-property resources.
11 Prepared by: Fernando Quijano and Yvonn Quijano © 2004 Prentice Hall Business PublishingPrinciples of Economics, 7/eKarl Case, Ray Fair General Equilibrium.
The Logic of Politics. Let’s assume people are: 1. self interested 2. rational.
A Rules-based Trading System: Multilateral, Regional and Bilateral Developments Opportunities and Challenges for Business and for South Africa Trudi Hartzenberg.
GLOBAL MARKETING Distribution Management. Why A Distribution Strategy? To make the right quantities of the right product or service available at the right.
Corporatism Origins and Development Forms of Corporatism
Economics of Crime and its Prevention How Much is too Much?
Ch. 11 General Equilibrium and the Efficiency of Perfect Competition
What games do economists play? To see more of our products visit our website at Tom Allen, Head of Economics, Eton College.
Player 2 Player 1 Self Interest Cooperation 1, 1 O,3 3,0 2, 2.
The Logic of American Politics The Politics of “Choice”
 The study of how to distribute limited resources  the study of how people choose to use scarce resources to satisfy their wants. What is Economics?
1 Understanding Global Politics Lecture 6: Neo-liberalism.
THE ECONOMY AND WORK ECONOMY Social institution that ensures the production, distribution and consumption of goods and services. Goods-- tangible objects.
Institutional Analysis Lecture 6: Collective Action.
Essential Questions of Unit 2 1.To what extent does the DOI, Constitution, and the Amendments recognize and protect the rights of the individual? 2.Why.
Economics of Conflict, War, and Peace
What you will learn in this chapter:
The Political Economy of International Trade Cooperation
International Relations
3. KEGAGALAN PASAR DAN INTERVENSI PEMERINTAH
Public Goods Many definitions in use
Session 2 Managing the global commons:
Unit 4 SOCIAL INTERACTIONS.
The Economic Problem Needs – the essentials of life, such
The Four Types of Goods.
Prof. Dr. Younis El Batrik
“The best things in life are free. . .”
The Role of Incentives and Communication in Strategic Alliances: An Experimental Investigation Strategic Management Journal, (2010) Rajshree Agarwal,
The Four Types of Goods.
Economic Policy and Market Regulation Part 3
Socialism vs. Capitalism
Assume Anarchy? Peter J. Boettke Constitutional Economics
Presentation transcript:

Session 2 Managing the global commons: The logic of international cooperation and the problem of the free-rider

What is private, what is public? First distinction by Jean-Baptiste SAY: free goods vs economics goods Private goods are rival and excludable in consumption > suitable for market transaction Club goods are excludable but non-rivalrous Public goods are non-rival and non-excludable in consumption > unsuitable for market transaction? Market failures? => Does that mean that the provision of private goods is regulated by the market, and the provision of public goods by the state?

Global public goods Public goods whose benefits cut across several countries and generations (Kaul) Traditional GPGs, governed by international agreements New GPGs, requiring concerted policy-making Concern about publicness of benefits Concerns about publicness of decision-making

Critiques of the definition Pure public goods are almost impossible to find Whether a good is private or public is a matter of public policy. Are some goods intrinsically private or public? Public utility may vary States are not the only providers of public goods Suggestions to shift the definition towards: Inclusiveness: active category, socially constructed Public provision, participatory decision-making Fairness and justice, public benefits

The logic of collective action Why do states cooperate?

Assumptions States are self-interested Their interests are often conflicting Theres no central authority Cooperation, at the end of the day, is about mutual adjustments to national policies so that a common, desirable outcome can be reached. Model: Prisoners dilemma

Conditions for cooperation Basic conditions: Reliable information Reciprocity Mutual interest Need for monitoring: role of international organisations as facilitators

The tragedy of the commons Open-access gazing land over-exploited because of self interest and lack of constraints. The field as a metaphor for common goods: in the absence of regulation and/or property, common goods are overexploited.

The prisoners dilemma Self-interest is primary driver No interest incentive to cooperate on a one-shot basis Equilibrium can be reached only if the game is repeated (and preferences revealed : role of international institutions) B silentB talks A silent6 months eachA: 10 years B: freed A talksA: freed B: 10 years 5 years each

The problem of the free rider Inherent problem of cooperation How should each member contribute to the provision of the good? How much can each member benefit from the good? > Issue of compliance

How to define collective preferences from individual preferences? Collective preferences are not fixed Theyre not always rationnal Theyre not easy to identify and can be contested > The aggregation of individual preferences can lead to a detrimental collective outcome.