The Polycentric Production of Global Public Goods

Abstract

Some goods plausibly generate non-excludable and non-rivalrous benefits at a global scale. These global public goods may include environmental goods such as protection of the ozone layer or mitigation of global climate change. Other plausible global public goods include the reduction of global existential risks, the protection of international peace, the protection of international trade routes, and the prevention of nuclear war. Many economists fear that public goods will be insufficiently provided absent central enforcement. This can be used as an argument for monocentric, one-size-fits-all solutions such as a global government, a powerful state acting as an imperial hegemon, or the establishment of binding global treaties. However, these monocentric approaches face serious problems of knowledge, incentives, abuse of power, and high transaction costs. In practice, polycentric arrangements may be a better approach to providing global public goods. Insights from the Bloomington school of institutional analysis can help illuminate how these types of polycentric approaches can work.