Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes
65 Pages Posted: 25 Jul 2013
There are 2 versions of this paper
Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes
Provision of a Public Good with Altruistic Overlapping Generations and Many Tribes
Date Written: January 23, 2013
Abstract
I compare the relative importance of inter-generational altruism and contemporaneous cooperation, in determining equilibrium climate policy, by imbedding an OLG framework with inter-generational altruism into a differential game between nations. The model uses new representations for the aggregate preferences of OLGs with paternalistic or pure altruism, and exponentially distributed or deterministic lifetimes. The Markov perfect equilibrium in the resulting game solves an auxiliary control problem. I obtain analytic results for a model with linear climate damages and numerical results for a model with convex damages. The relative importance of altruism and cooperation depends on model specifics and the equilibrium type.
Keywords: overlapping generations, altruism, time consistency, Markov Perfection, differential games, climate policy
JEL Classification: C73, D62, D63, D64, H41, Q54
Suggested Citation: Suggested Citation