Protection against national emergency: International public goods and insurance

This paper develops a model of economic protection against random emergency costs. To mitigate the effects of these disruptions, each country creates a private mutual insurance market and provides voluntarily an international public good. We will explore how protection through voluntary provision of an international public good as well as mutual insurance would affect welfare. The existence of both mutual insurance and an international public good is crucial to obtain welfare equalization and the weak paradox of international transfer.