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On a World Climate Assembly and the Social Cost of Carbon

Martin Weitzman

No 22813, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper postulates the conceptually useful allegory of a futuristic “World Climate Assembly” (WCA) that votes for a single worldwide price on carbon emissions via the basic democratic principle of one-person one-vote majority rule. If this WCA framework can be accepted in the first place, then voting on a single internationally- binding minimum carbon price (the proceeds from which are domestically retained) tends to counter self-interest by incentivizing countries or agents to internalize the externality. I attempt to sketch out the sense in which each WCA-agent's extra cost from a higher emissions price is counter-balanced by that agent's extra benefit from inducing all other WCA-agents to simultaneously lower their emissions in response to the higher price. The first proposition of this paper derives a relatively simple formula relating each emitter's single-peaked most-preferred world price of carbon emissions to the world “Social Cost of Carbon” (SCC). The second and third propositions relate the WCA-voted world price of carbon to the world SCC. I argue that the WCA-voted price and the SCC are unlikely to differ sharply. Some implications are discussed. The overall methodology of the paper is a mixture of mostly classical with some behavioral economics.

JEL-codes: F51 H41 K23 Q54 Q58 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-cdm, nep-ene, nep-env and nep-res
Note: EEE
References: View references in EconPapers View complete reference list from CitEc
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Published as Martin L. Weitzman, 2017. "On a World Climate Assembly and the Social Cost of Carbon," Economica, vol 84(336), pages 559-586.

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