80-117

• Σαββίδης, Χαράλαμπος

In the present work we try to find out whether the existence of positive international externalities generates an incentive for cooperation between governments and if the adoption of a transfer payments scheme moderates that intensive. We adopt a simple economic model incorporating the international linkage of national economies. Utility proves always to be higher when countries cooperate than when they play Nash to each other. We then add a transfer payment scheme and prove it intensifies the intensive to cooperate, since a moral hazard problem arises on the top of the free riding problem.

• Economics and Business
• Computer and information sciences

• Economic policy
• Statistics

optimal taxation, international policy coordination, production externalities, foreign aid, intertemporal choice

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