INTERGENERATIONAL PUBLIC GOODS: TRANSNATIONAL CONSIDERATIONS
| Date | 01 July 2009 |
| DOI | http://doi.org/10.1111/j.1467-9485.2009.00488.x |
| Published date | 01 July 2009 |
| Author | Todd Sandler |
INTERGENERATIONAL PUBLIC GOODS:
TRANSNATIONAL CONSIDERATIONS
Todd Sandler
n
Abstract
This paper analyzes public goods whose benefits cross countries’ borders and
generations. Once provided, transnational intergenerational public goods (TIPGs)
are assets that generate benefits for subsequent generations. For treaties involving
TIPGs, a coalition of rich developed countries are apt to shoulder more of the
provision burden than a coalition of poor developing countries. This burden
inequality worsens if the developed countries unilaterally display altruism to future
generations; nevertheless, altruistic benefits may offset reduced spillovers. When
current generations strategize with respect to future generations, provision and
efficiency suffer; however, the hypothesized unequal burden sharing improves
somewhat. For alternative aggregator technologies of public supply, these one-
sided burdens may be partly ameliorated.
I Intro ductio n
In recent years, there has been an increased interest in transnational public goods
(TPGs), whose nonrival and nonexcludable benefits transcend national borders
(see, e.g., Kindleberger, 1986; Sandler, 1997, 1998, 2004; Kaul et al., 1999; Ferroni
and Mody, 2002; Secretariat of the International Task Force on Global Public
Goods, 2006). This interest has been sparked by concerns for the environment,
security, health, and governance. In particular, the analysis of TPGs offers insights
into treaty formation and adherence (Sandler and Sargent, 1995; Barrett, 2003),
and is particularly relevant for the study of pollution, the commons, and other
issues associated with resource and public economics. Many of these TPGs possess
benefits that transgress not only national borders but also generations as actions
yesterday or today impact the consumption of tomorrow’s generations (John et al.,
1995; John and Pecchenino, 1997). Curtailing stratospheric ozone depletion or
limiting the accumulation of greenhouse gases (GHGs) through treaty or other
collective action mechanism generates benefits into the distant future. This is also
true of preserving natural habitats (e.g., barrier reefs or forests), mapping the earth
or the heavens, accumulating knowledge, preserving culture, and eradicating pests
or diseases. Past investigations have either studied the transnational (see, e.g.,
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School of Economic, Political and Policy Sciences, University of Texas at Dallas
Scottish Journal of Political Economy, Vol. 56, No. 3, July 2009
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Ferroni and Mody, 2002) or the transgenerational dimension (see, e.g., Sandler and
Smith, 1976; Sandler, 1982; Myles, 1997; Rangel, 2003, 2005). Only a few past
studies investigated the interplay of transnational and transgenerational benefits
associated with intergenerational public goods (IPGs) (see, e.g., Sandler, 1978;
John and Pecchenino, 1997). A related issue is the intergenerational responsibility
that a present generation has in regards to addressing the harms caused by past
generations.
1
Although this ethical concern is important, this paper solely examines
efficiency aspects.
The primary purpose of the current study is to extend the analysi s of
transnational IPGs (TIPGs) to analyze the implications for treaty making and
allocative efficiency when there are two coalitions of countries that differ in terms of
economic development and, of course, national income. This scenario is
characteristic of treaties such as the Montreal Protocol on ozone shield depleters
or the Kyoto Protocol on global warming. My theoretical investigation shows that
treaties involving TIPGs will place a much larger provision burden on the more
developed countries even in the absence of distributional considerations. As such,
TIPGs create an exploitation hypothesis founded, in part, on temporal considera-
tions where the more farsighted and altruistic countries carry a disproportionately
large burden for the more myopic countries.
2
In this paper, disproportionality refers
to one coalition covering more of the provision expenditure of the TIPG. A
secondary purpose is to permit the present generation to act strategically vis-a
`-vis the
future generation; this strategizing ameliorates somewhat the unequal burden placed
on developed countries with respect to TIPGs. A third purpose is to introduce
alternative aggregation technologies of public supply (i.e., how individual provision s
add to the overall consumption level) that play a crucial role in how generations can
trade backward and forward in time to support TIPGs. This role has gone
unrecognized and can influence intergenerational burden sharing and efficiency.
The analysis indicates that efforts to account for intergenerational benefits –
say, through taxation or debt accumulation – place greater TIPG burdens on the
more farsighted coalition. Actions to account for spatial externalities may not
improve welfare from an intergenerational standpoint. For intergenerational
Pareto optimality, treaties concerning TIPGs must adjust for spatial and temporal
spillovers; most participants are unlikely to display such altruism to their
neighbors, their neighbor’s children, or their children’s children. Sophisticated
efforts by a current generation to adjust for the anticipated TIPG provision of a
subsequent generation reduce efficiency and redistribute TIPG provision burdens
from rich to poor countries. Some TIPG aggregator technologies are more
conducive than others to intergenerational recontracting and to tying together
1
From an ethical perspective, the current and future generations in developed countries may
be viewed as responsible for assuming greater clean-up burdens than developing countries for,
say, global warming, insofar as developed countries’ subsequent generations gained from the
pollution of their ancestors (Gosseries, 2004).
2
Mancur Olson (1965) formulated the exploitation hypothesis of collective action, where the
large (rich) agents shoulder a disproportionate burden of the public good for the small (poor)
agents. In particular, Olson indicated that the rich nations spend a greater percentage of their
national income on the public good than their poorer counterpart.
TODD SANDLER354
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