ABSTRACT
Some of the most serious environmental problems can be characterized as international public good problems. The damage each country suffers depends on the aggregated emission of harmful material and not (only) on local emissions. The most prominent example is the climate change expected from global CO2 emissions. It is not in the self-interest of each individual country to abate the Pareto efficient amount of emissions, because parts of the total benefit generated by abatement cannot be internalized. Given this situation, environmental pressure groups often demand that local politicians take on a leading role and abate more emissions than is in the narrow self-interest of the country. Obviously, they expect that “a good example” may encourage other countries to join the coalition of abating countries in order to overcome the social dilemma situation all countries are confronted with. Furthermore, there is the hope that the leader himself can profit from the leading position. As an example we can quote the German Federal Minister for the Environment (BMU, 2002):
We are the leader in international climate protection and we want to maintain our leading position . . . because climate protection creates new jobs and opportunities to export . . . climate protection policy generates not only environmental benefits but also economic profits. The leading position of German climate protection policy is profitable.
