An International Carbon-Price Commitment Promotes Cooperation
Peter Cramton, Axel Ockenfels and Steven Stoft ,
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Economics of Energy & Environmental Policy, 4:2, 51-64

To promote cooperation in international climate negotiations, negotiators should focus on a common commitment. Such commitments have the advantage of facilitating reciprocal “I will if you will” agreements in a group. Reciprocity is the basis for cooperation in repeated public goods games, and a uniform price would provide a natural focal point for a common international commitment. Such a price is also essential for efficient abatement. Countries would retain flexibility in how to implement the price—with cap-and-trade, a carbon tax, or a hybrid approach.

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