| The dissertation examines the theory of provision of public goods in an international setting, in which provision is presumed to be voluntary, and in which trade barriers may result in several countries purchasing the same public good at different prices. Chapter I reviews the received literature. Chapter II introduces a diagrammatic method for analyzing Cournot-Nash provision of public goods. The diagram, valid for any number of parties, shows relative endowments at which the several parties will contribute public goods or, alternatively, free-ride. A generalization of the Warr (1983) neutrality theorem to the gradient of the quantity of public goods, applies simultaneously to all relative endowments, and is easily illustrated using the diagram. International price differences in the public good, and impure public goods, can also be analyzed with the diagram. Chapter III treats failure of cost monotonicity, or "adverse cost-control incentives." If one contributor's cost of public goods rises, a new Cournot-Nash equilibrium results, and it is possible for the party suffering the upward price shock to have higher utility in the new equilibrium than before. Moreover, this condition can be true for every party to the equilibrium. General conditions for this phenomenon are derived. Chapter IV applies results from earlier chapters. The relative-endowment diagram is used to show the position of West Germany, Japan and the U.S.A. with respect to free-riding conditions for international public goods, under a variety of conditions. Adverse cost-control incentives are expressed as an elasticity. For 1-homogeneous (money-metric) national utility functions, the sum of all countries' incentive-elasticity indices is neutral to income redistribution in Cournot-Nash equilibria, for pure public goods, even if prices are internationally unequal. A prospectus for empirical research of cost-control incentives is supplied. Chapter V integrates the findings, surveys their relationship to received literature, and offers the policy prescription that adverse cost-control incentives can cause systematic inflation in the cost of, (and reduce the quantity of) international public goods. |
