We analyze the strategic interaction between mitigation (publicgood) and adaptation (private good) strategies in a climate agreement.We show that adaptation can lead to larger self-enforcing agreements,associated with higher global mitigation levels and welfare if it causesmitigation levels between different countries to be no longer strate-gic substitutes but complements. Thus, the fear that adaptation willreduce the incentives to mitigate carbon emissions may be unwar-ranted. We argue that our results extend to many important public goods. The purchase of private goods may not crowd out the provision of public goods, as this is commonly believed.
|Name||Bath Economics Research Working Papers|