We consider the decentralized provision of a global public good with local externalities in a spatially explicit model. Communities decide on the location of a facility that benets everyone but exhibits costs to the host and its neighbors. They share the costs through transfers. We examine the cooperative game associated with this so-called NIMBY (Not In My Back-Yard") problem. We derive and discuss conditions for core solutions to exist. These conditions are driven by the temptation to exclude groups of neighbors at any potential location. We illustrate the results in dierent spatial settings. In particular, we construct a hypothetical example on a real administrative unit in which the core is shown to be empty. These results clarify how property rights can aect cooperation and shed further light on a limitation of the Coase theorem.
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