These results demonstrated that kidney transplantation along with a better quality of life for patients are a cost-saving decision for developing countries.
We model dynamic mechanisms for a global commons. Countries value both consumption and conservation of an open access resource. A country's relative value of consumption to conservation is privately observed and evolves stochastically. An optimal quota maximizes world welfare subject to being implementable by Perfect Bayesian equilibria. With complete information, the optimal quota is first best; it allocates more of the resource each period to countries with high consumption value. Under incomplete information, the optimal quota is fully compressed: Identical countries receive the same quota even as environmental costs and resource needs differ. This is true even when private information is negligible.
a b s t r a c tGlobal games emerged as an approach to equilibrium selection. For a general setting with supermodular payoffs, unique selection of equilibrium has been obtained through iterative elimination of strictly dominated strategies. For the case of global games with strategic substitutes, uniqueness of equilibrium has not been proved by iterative elimination of strictly dominated strategies, making the equilibrium less appealing. In this work we provide a condition for dominance solvability in a simple three-player binary-action global game with strategic substitutes. This opens an unexplored research agenda on the study of global games with strategic substitutes.
This paper studies dynamic mechanisms for a global commons. A leading example is carbon consumption. We posit a model in which each country benefits both from the use and the aggregate conservation of an open access resource at each date. Conservation is beneficial because it reduces a country's environmental costs of resource use. A country's relative value of consumption-to-conservation is summarized by a privately observed parameter -its resource type -which evolves stochastically each period. An optimal quota system is an international agreement over resource consumption that maximizes world welfare subject to being implementable by Perfect Bayesian equilibria in compliance and disclosure strategies. With complete information, we show that the optimal quota is first best; it allocates more of the resource each period to countries with high value of consumption (and low value for conservation). However, under incomplete information, we show that the optimal quota is fully compressed -it is invariant to the country's resource type at every point in time. In the case of CO 2 , this means that all ex ante identical countries receive the same emissions restrictions despite having differently evolved environmental costs and resource needs. We show that full compression holds under fairly general distributions on private shocks. JEL Codes: C73, D82, F53, Q54, Q58
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