Coase Meets Negishi: Property Rights, Welfare Weights, and Distributional Consequences in Climate Economics

Simon F. Lang, Matthew D. Gordon and Matthew Kotchen

No 35971, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a property-rights based approach for defining welfare weights in economic models of climate change. Whether there is a "right to pollute" or a "right to no pollution" is increasingly contested in legislatures, courts, and international climate negotiations. We show how these notions of property rights can provide the basis for "Coasean welfare weights" that are applicable in multilateral public goods settings. Distributional questions are addressed through positive analysis, conditional on property rights, rather than normative views about redistribution. The implied transfers are consistent with a bargained solution over the net benefits of addressing climate change and reflect the value of property rights over emissions. The approach defines efficient allocations that generate Pareto improvements, in contrast to commonly used Negishi weights. We implement the approach in a global integrated assessment model to quantify what countries have at stake in ongoing political and legal debates about emissions-related property rights.

JEL-codes: H41 Q50 (search for similar items in EconPapers)
Date: 2026-10
Note: EEE PE
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