Working Paper: NBER ID: w11889
Authors: William D. Nordhaus
Abstract: This study reviews different approaches to the political and economic control of global public goods like global warming. It compares quantity-oriented control mechanisms like the Kyoto Protocol with price-type control mechanisms such as internationally harmonized carbon taxes. The pros and cons of the two approaches are compared, focusing on such issues as performance under conditions of uncertainty, volatility of the induced carbon prices, the excess burden of taxation and regulation, potential for corruption and accounting finagling, and ease of implementation. It concludes that, although virtually all discussions about economic global public goods have analyzed quantitative approaches, price-type approaches are likely to be more effective and more efficient.
Keywords: global warming; Kyoto Protocol; carbon taxes; climate change policies
JEL Codes: H2; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| price-type mechanisms (D47) | effectiveness in reducing emissions (Q52) |
| quantity-oriented control mechanisms (C54) | effectiveness in reducing emissions (Q52) |
| price-type mechanisms (D47) | carbon price volatility (Q31) |
| quantity-oriented control mechanisms (C54) | carbon price volatility (Q31) |
| Kyoto Protocol's fixed emissions targets (Q58) | carbon price volatility (Q31) |
| price-type mechanisms (D47) | economic stability (E63) |
| quantity-oriented control mechanisms (C54) | economic stability (E63) |
| shift towards price-based approaches (P22) | issues related to corruption and financial mismanagement (H57) |