How a Minimum Carbon Price Commitment Might Help Internalize the Global Warming Externality

It is difficult to resolve the global warming free-rider externality problem by negotiating many different quantity targets. By contrast, negotiating a single internationally-binding minimum carbon price (the proceeds from which are domestically retained) counters pure self-interest. A uniform price embodies “countervailing force” against free riding by automatically incentivizing parties to internalize the externality via a simple understandable formula that embodies a common climate commitment based on principles of reciprocity, quid-pro-quo and I-will-if-you-will. Professor Martin Weitzman will give a somewhat technical talk centered on a mathematical model. Some implications are discussed.