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"Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?"

"Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?"

Discussion Paper 2014-61, Harvard Project on Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School

January 2014

Author: Martin L. Weitzman

The Harvard Project on Climate Agreements Discussion Paper Series

Belfer Center Programs or Projects: Harvard Project on Climate Agreements

 

ABSTRACT

It is difficult to resolve the global warming free-rider externality problem by negotiating quantity targets. By contrast, negotiating a single binding minimum carbon price (the proceeds from which are domestically retained) counters self interest by incentivizing agents to internalize the externality. The model of this paper indicates an exact sense in which each agent's extra cost from a higher emissions price is counterbalanced by that agent's extra benefit from inducing all other agents to simultaneously lower their emissions. Some implications are discussed.

 

For more information about this publication please contact the Harvard Project on Climate Agreements Coordinator at 617-496-8054.

For Academic Citation:

Weitzman, Martin L. "Can Negotiating a Uniform Carbon Price Help to Internalize the Global Warming Externality?." Discussion Paper 2014-61, Harvard Project on Climate Agreements, Belfer Center for Science and International Affairs, Harvard Kennedy School, January 2014.

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