International aspects of public goods provision

Abstract

This paper considers the extension of the theory of public consumption goods to an international context with public goods whose benefits are global. In one version of the model there are no restrictions on lump sum transfers within and between nations, and the Samuelson conditions for welfare maximization then hold for the world as a whole. However, in another version there are no income transfers between nations, and the conditions then have to be modified. In particular, it is shown that global production efficiency is not in general desirable in the absence of international transfers. Problems of national incentives and international implementation are also considered.