Internalizing the Climate Externality: Can a Uniform Price Commitment Help?

Martin Weitzman

Economics of Energy & Environmental Policy, 2015, vol. Volume 4, issue Number 2

Abstract: 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 agents to internalize the externality. In this contribution I attempt to sketch out, mostly with verbal arguments, the sense in which each agent's extra cost from a higher emissions price is counter-balanced by that agent's extra benefit from inducing all other agents 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 policy-makers and the general public.

JEL-codes: F0 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Downloads: (external link)
http://www.iaee.org/en/publications/eeeparticle.aspx?id=91 (text/html)
Access to full text is restricted to IAEE members and subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:aen:eeepjl:eeep4-2-weitzman

Ordering information: This journal article can be ordered from
http://www.iaee.org/ ... ons/eeepjournal.aspx

Access Statistics for this article

More articles in Economics of Energy & Environmental Policy from International Association for Energy Economics Contact information at EDIRC.
Bibliographic data for series maintained by David Williams ().