Matching mechanism in global public goods games: a case of climate protection

In the setting of dealing with climate change, this article designs a matching mechanism for global public goods provision with the aggregative game approach. Given endowment and the technology of each country, we propose the conditions under which the matching mechanism is able to guarantee full participation and Pareto efficient provision, respectively, in the cases with certain and uncertain preference information. These conditions cannot only be adopted in international negotiation and cooperation, but also refines the theory of matching game. In comparative static analyses, we discover that: First, changes of initial stock of climate goods produce a wealth effect and the crowd-out effect is less than 1. Second, climate tax policies affect the supply and welfare of each country only when they produce wealth effects, and if tax revenue is transferred into climate goods with more advanced technology, they will produce positive wealth effects. Third, modifying matching plans dynamically and appropriately can urge countries to improve technology, and especially given a Pareto optimal mechanism, adjusting the matching plan to keep marginal rates of transformation unchanged as technology changes is still able to ensure full participation and efficient supply of climate goods.