Global Challenges.

• Author: Becker, Nir

By Todd Sandler.

New York: Cambridge University Press, 1997. Pp. xvii, 234. $54.95.

The impression that one gets after reading Global Challenges by Todd Sandler is that we are all going to die, either from nuclear bombs or simply from pollution. This inevitable, quite pessimistic conclusion keeps popping up in this book even though Sandler himself argues that one does not necessarily have to be so pessimistic. The book is about an interesting idea that occupies a lot of research energy in the environmental economics profession. With technological innovation, production externalities that do not respect national borders become more and more important and paint a gloomy future for our planet. Environmental problems have always concerned societies. What makes the problem that Sandler analyzes interesting is that, while in the past, some problems could be solved at the regional or national level, today, international effort is needed to solve such problems as global warming, tropical deforestation, and others discussed extensively in the book. While nations can internalize the externalities by mechanisms such as taxes, tradable permits, or direct control, these methods cannot work in the international arena without the countries agreeing first on the rules of the game. This is only one of the major difficulties facing the world today, and Sandler tries to explain them with some policy conclusions.

The book is not hard to read. It is interesting and stimulating. It is suited not only for economists but also (and maybe especially) for public policy students and for political scientists as well as policy makers not necessarily involved in academic work. This is both an advantage and disadvantage to be discussed later. The book contains eight chapters, which will be briefly discussed, but I will concentrate more on the overall direction taken by the book's contents.

In Chapter 1, the problem is defined and some examples are provided to show that we are living now in a problematic world. In Chapter 2, Sandler uses game theory in which the outcome to one player (in this case a country) depends not only on his or her actions but on the actions of the other players as well. This is especially suited to cases in which property rights are not well defined, such as with environmental resources. Sandler argues that there will be people that question his decision to use game theory, and he proposes combining results from other methods with this method...