Jean Tirole, is a professor at the Toulouse School of Economics and recipient of the Nobel Memorial Prize in Economic Sciences (2014). Although he prefers global cap-and-trade to a global price commitment, he shares many of our ideas regarding negotiations and has added a crucially important analysis of the negotiation “waiting game.”
Partial Summary of Climate-Negotiation Views
The Copenhagen negotiations on climate change (2009) unfortunately did not bring the waiting game initiated by the Tokyo protocol (1997) to a halt. … Countries’ strategic behavior will increase the cost of delay beyond that associated with the classic free-riding problem. … their technological and societal choices will reflect the desire to extract more concessions in future negotiations. … It is therefore time to substitute Realpolitik for wishful thinking and to take on board the various participation constraints. (2012)
Price coherency: the price of carbon should be the same in all countries and industries and should be intertemporally coherent. The proponents of sectoral agreements argue that breaking up the problem in multiple pieces may facilitate negotiations. I am not sure, …one would need to reach N international agreements instead of one.
As for the choice of instrument, a wide post-Weitzman (1974) literature has investigated the trade-offs between a carbon tax and cap-and-trade. Political economy considerations matter too, pushing in my opinion slightly in the direction of the cap-and-trade solution. … I feel that economists’ disaccord on the choice between taxes and permits … is in the current situation of second-order importance. Note, though, that these disagreements among economists have been misused by interest groups that oppose placing any price on GHG emissions.
References and Full-Text Links
2012-01 Tirole, Jean. “Some Political Economy of Global Warming,” Economics of Energy and Environmental Policy.
2011-04 Tirole, Jean and Julien Beccherle. “Regional initiatives and the cost of delaying binding climate change agreements,” Journal of Public Economics.
2010-01 Tirole, Jean. “Climate Change Policy: A New International Architecture,” Conference on Infrastructure Economics and Development, Toulouse (slides).
2009-11 Tirole, Jean. “Climate change negotiations: Time to reconsider,” VOXeu.org.
2009-09 Tirole, Jean. “Politique climatique: une nouvelle architecture internationale” (with an English Summary on page 349).
2008-11 Tirole, Jean. “Some Economics of Global Warming,” (Angelo Costa lecture), Rivista di Politica Economica, 98: 9-41.