To Tax or Not to Tax: Alternative Approaches to Slowing Global Warming

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.