Selfish bureaucrats and policy heterogeneity in Nordhaus' DICE

Richard S.J. Tol*

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Nordhaus' seminal DICE model assesses first-best climate policy, a useful but unrealistic yardstick. I propose a measure of policy inefficacy if carbon prices are heterogeneous and use observed prices to recalibrate the DICE model. I introduce a Niskanen-inspired model of climate policy with selfish bureaucrats, and calibrate it to carbon dioxide emissions in the European Union and the policy models used by the IPCC. This model also implies a measure of policy inefficacy that I use to recalibrate DICE. The optimal global mean temperature is 1°C perhaps 2°C higher in the recalibrated than in the original DICE model.

Original languageEnglish
Article number2040006
JournalClimate Change Economics
DOIs
Publication statusPublished - 2020

Keywords

  • Climate policy
  • price heterogeneity
  • selfish bureaucrats

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