Global Warming Currently a commons:anyone is free to put CO,in the air. Suppose we believe that is a problem,want to change it.How? Property rights:You can't put CO2 in the air If it affects me by raising global temperature,sea level Unless you have my permission Liability rule:If you do,you pay me damages based on the harm to me Pigouvian tax:Carbon tax ·Regulation What are the problems with each? Property rights solution:Nobody can light a match.Breath out?Life ends. Liability rule:I have to sue you for damages of.000001 cent? Carbon tax:Problem of estimating the externality,monitoring CO2 output. Direct Regulation:Need permission to do almost everything Usual problems of information needed by the regulators Incentives of the regulators-lots of opportunities for corruption of various sorts Global Warming • Currently a commons: anyone is free to put CO2 in the air. • Suppose we believe that is a problem, want to change it. How? • Property rights: You can’t put CO2 in the air • If it affects me by raising global temperature, sea level • Unless you have my permission • Liability rule: If you do, you pay me damages based on the harm to me • Pigouvian tax: Carbon tax • Regulation • What are the problems with each? • Property rights solution: Nobody can light a match. Breath out? Life ends. • Liability rule: I have to sue you for damages of .000001 cent? • Carbon tax: Problem of estimating the externality, monitoring CO2 output. • Direct Regulation: Need permission to do almost everything • Usual problems of information needed by the regulators • Incentives of the regulators—lots of opportunities for corruption of various sorts