Yale University, USA. The author is Sterling Professor of Economics at Yale University. The modeling efforts underlying this study have been supported by the National Science Foundation and the Department of Energy. The ideas in this study have benefited from discussions with Richard Cooper, Robert Hahn, Charles Kolstad, Robert Stavins, and David Victor, and comments from an anonymous referee, but any errors are the sole responsibility of the author
This study reviews different approaches to the political and economic control of global public goods such as global warming. It compares quantity-oriented control mechanisms like the Kyoto Protocol with price-type control mechanisms such as internationally harmonized carbon taxes. The analysis focuses on such issues as the relationship to ultimate targets, performance under conditions of uncertainty, volatility of induced carbon prices, the inefficiencies of taxation and regulation, potential for corruption and accounting finagling, and ease of implementation. It concludes that price-type approaches such as carbon taxes have major advantages for slowing global warming.