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A New Understanding of Coase Theorem and Emission Rights Trading of All People

Author

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  • Hong Sheng

    (Research Fellow of Unirule Institute of Economics, Independent Scholar, Beijing, China)

Abstract

The condition of “defining property rights” in Coase Theorem is actually the key method to solve the external infringement problems such as air pollution. It changes the public nature of external infringement into private nature. Because the cost of trading private goods is much lower than that of public goods, it will greatly simplify the solution of air pollution and other problems. The primary reason why emissions trading has achieved some success is that emission quotas define the property rights (or responsibilities) among emitters. This turns public externalities into private externalities, and subsequently forms protected and tradable private property rights. As the total amount and quota of emissions still have to be arranged by the emission regulatory authorities, emissions trading has not completely got rid of the government’s intervention. Therefore, this paper suggests that all emission quotas should be given to all residents in the world, and each of them has an equal share of emission quotas, which can be traded in the online global carbon emission market, and emitters can buy emission quotas in the market. In this way, the value of reducing carbon emissions for everyone can be evaluated more accurately, and the deadlock between countries can be broken, so that the cause of reducing carbon emissions can have a great development.

Suggested Citation

  • Hong Sheng, 2023. "A New Understanding of Coase Theorem and Emission Rights Trading of All People," Man and the Economy, De Gruyter, vol. 10(2), pages 75-100.
    • Handle: RePEc:bpj:maneco:v:10:y:2023:i:2:p:75-100:n:1003
    DOI: 10.1515/me-2024-2007
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