We consider the decentralized provision of a global public good with local external- ities in a spatially explicit model. Communities decide on the location of a facility that benefits 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 different 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 affect cooperation and shed further light on a limitation of the Coase theorem.
NIMBY; externality; Coase theorem; pollution; waste; core; cooperative game; spatial model;
- C71: Cooperative Games
- D62: Externalities
- Q53: Air Pollution • Water Pollution • Noise • Hazardous Waste • Solid Waste • Recycling
- R53: Public Facility Location Analysis • Public Investment and Capital Stock
Stefan Ambec, and Yann Kervinio, “Cooperative decision-making for the provision of a locally undesirable facility”, TSE Working Paper, n. 14-480, March 26, 2014.
Stefan Ambec, and Yann Kervinio, “Cooperative decision-making for the provision of a locally undesirable facility”, Social Choice and Welfare, vol. 46, 2016, pp. 119–155.
Social Choice and Welfare, vol. 46, 2016, pp. 119–155