Negotiating effective institutions against climate change

Christian Gollier, Jean Tirole

    Research output: Contribution to journalArticlepeer-review

    36 Scopus citations


    In environmental matters, the free riding generated by the lack of collective action is aggravated by concerns about leakages and by the desire to receive compensation in future negotiations. The dominant "pledge and review" approach to mitigation will deliver appealing promises and renewed victory statements, only to prolong the waiting game. The climate change global commons problem will be solved only through coherent carbon pricing. We discuss the roadmap for the negotiation process. Negotiators must return to the fundamentals: the need for uniform carbon pricing across countries, for verification, and for a governance process to which countries would commit. Each country would enjoy subsidiarity in its allocation of efforts within the country. We suggest an enforcement scheme based on financial and trade penalties to induce all countries to participate and comply with the agreement. Finally, the choice among economic approaches, whether a carbon price commitment or a cap-and-trade, is subject to trade-offs, on which alternative reasonable views may co-exist. We discuss monitoring reasons for why we personally favor an international cap-and-trade agreement.

    Original languageEnglish (US)
    Pages (from-to)5-27
    Number of pages23
    JournalEconomics of Energy and Environmental Policy
    Issue number2
    StatePublished - 2015


    • COP
    • Cap-and-trade
    • Carbon price
    • Climate change
    • Global warming
    • International public goods
    • Pledge-and-review
    • Prices versus quantities
    • UN climate negotiations

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Energy (miscellaneous)
    • Management, Monitoring, Policy and Law

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