Global unanimity agreement on the carbon budget

Humberto Llavador, John Roemer and Thomas Stoerk

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper analyzes a stylized model of the global economy in which countries must agree on the carbon budget while the decision on the level of carbon emissions is decentralized, with firms treating their emissions as a production input for which a uniform price is charged. The revenue accumulates in a global fund and is returned to global citizens according to national shares that are announced ex ante. The vector of country shares for the distribution of the carbon revenue assures that countries agree by unanimity on the carbon budget. The equilibrium exhibits the following desired features: (1) the global emissions level is set by unanimous agreement; (2) the demand to emit carbon is decentralized and, hence, there is no need to determine the distribution of permits; and (3) the equilibrium is Pareto efficient. We explore the implication of the model in an application based on RICE-2010.

Keywords: carbon price; climate economics; climate policy; international environmental agreement (search for similar items in EconPapers)
JEL-codes: F53 Q54 Q56 Q58 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2022-12-13
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Cuadernos Economicos de ICE, 13, December, 2022, 2022(104), pp. 9 - 29. ISSN: 0210-2633

Downloads: (external link)
http://eprints.lse.ac.uk/123736/ Open access version. (application/pdf)

Related works:
Working Paper: Global Unanimity Agreement on the Carbon Budget (2019)
Working Paper: Global unanimity agreement on the carbon budget (2019)
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:ehl:lserod:123736

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().