This survey investigates the increasing importance of global public goods (GPGs) in today’s interdependent world, driven by ever-growing, cross-border externalities and public good spillovers. Novel technologies, enhanced globalization, and population increases are among the main drivers of the rise of GPGs. Key GPGs include curbing climate change, instituting universal regulatory practices, eradicating infectious diseases, preserving world peace, discovering scientific breakthroughs, and limiting financial crises. The survey presents a compact theoretical foundation for GPGs, grounded in the provision of public goods. Because countries may be contributors or noncontributors to a particular GPG, coalition formation and behavior play a role, as do strategic interactions between a contributor coalition and other countries. In the survey, recurrent themes include strategic considerations, alternative institutional arrangements, GPGs’ defining properties, new actors’ roles, and collective action concerns. The four properties of GPGs—benefit non-rivalry, benefit non-excludability, aggregator technology, and spillover range—influence the GPGs’ supply prognoses and the need for and form of provision intervention, which may affect the requisite institutional changes. Three representative case studies illustrate how theoretical insights inform policy and empirical tests. Regional public goods are shown to involve a question of subsidiarity and different actors compared to GPGs.

This essay provides an up-to-date summary of the findings of the literature on the economics of alliances. We show that the study of the economics of alliances has played a pivotal role in understanding and applying public good analysis to real-world applications. We establish that the manner in which alliances address burden sharing and allocative issues is related to strategic doctrines, weapon technology, perceived threats, and membership composition. Past contributions are evaluated, and areas needing further development are identified. The theoretical and empirical knowledge gained from the study of alliances is shown to be directly applicable to a wide range of international collectives.

This paper derives systems of demand equations for distinguishing between Nash-Cournot and Lindahl behavior in a group that either shares a pure public good or an activity that provides a private and a pure public joint product. Systems of simultaneous equations are estimated based upon Nash-Cournot and Lindahl behavior for a sample of ten NATO allies for the 1956–1987 period. Nonnested hypothesis tests support the Nash-Cournot specification for five of the ten sample allies. No evidence of Lindahl behavior is found. The Nash-Cournot joint-product specification outperforms the pure public model for all sample allies.

This overview examines critically the post-9/11 empirical literature on terrorism. Major contributions by both economists and political scientists are included. We focus on five main themes: the changing nature of terrorism, the organization of terrorist groups, the effectiveness of counterterrorism policies, modern drivers or causes of terrorism, and the economic consequences of terrorism. In so doing, we investigate a host of questions that include: How do terrorist groups attract and retain members? What determines the survival of terrorist groups? Is poverty a root cause of terrorism? What counterterrorism measures work best? In the latter regard, we find that many counterterrorism policies have unintended negative consequences owing to attack transference and terrorist backlash. This suggests the need for novel policies such as service provision to counter some terrorist groups’ efforts to provide such services. Despite terrorists’ concerted efforts to damage targeted countries’ economies, the empirical literature shows that terrorism has had little or no effect on economic growth or GDP except in small terrorism-plagued countries. At the sectoral level, terrorism can adversely affect tourism and foreign direct investment, but these effects are rather transient and create transference of activities to other sectors, thus cushioning the consequences.

Jyoti Khanna, Wallace E. Huffman, Todd Sandler, Agricultural Research Expenditures in the United States: A Public Goods Perspective, The Review of Economics and Statistics, Vol. 76, No. 2 (May, 1994), pp. 267-277

This paper devises an empirical methodology for discriminating between the median voter model and the oligarchy choice model when applied to the collective provision of a public good. In particular, an empirical methodology is engineered so that a nested test procedure can evaluate competing models. The authors apply this methodology to examine the demand for military activities of ten members of the NATO alliance. A two-stage least squares procedure, corrected for autocorrelation, is used to estimate the demand equations. Test results vary: some allies abide by the median voter model, others by the oligarchy model, and still others by neither.