NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How a Minimum Carbon Price Commitment Might Help to Internalize the Global Warming Externality

Martin L. Weitzman

NBER Working Paper No. 22197
Issued in April 2016
NBER Program(s):Environment and Energy Economics

It is difficult to resolve the global warming free-rider externality problem by negotiating many different quantity targets. By contrast, negotiating a single internationally-binding minimum carbon price (the proceeds from which are domestically retained) counters self-interest by incentivizing countries to internalize the externality. In this contribution I attempt to sketch out, mostly with verbal arguments, the sense in which each country's extra cost from a higher emissions price is counter-balanced by that country's extra benefit from inducing all other countries to simultaneously lower their emissions in response to the higher price. Some implications are discussed. While the paper could be centered on a more formal model, here the tone of the discussion resembles more that of an exploratory think piece directed to policymakers and the general public.

download in pdf format
   (180 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w22197

Users who downloaded this paper also downloaded* these:
Acemoglu, Egorov, and Sonin w22174 Social Mobility and Stability of Democracy: Re-evaluating De Tocqueville
Levine, Lin, and Xie w22153 Corporate Resilience to Banking Crises: The Roles of Trust and Trade Credit
Hsiang w22181 Climate Econometrics
Jerch, Kahn, and Li w22088 Efficient Local Government Service Provision: The Role of Privatization and Public Sector Unions
Weitzman w19644 Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us