The Logic of Effective Climate Action

Barry Eichengreen

BERKELEY – In his classic book, The Logic of Collective Action, the late great Mancur Olson explained that the hardest policies to implement are those with diffuse benefits and concentrated costs. Olson’s argument was straightforward: individuals bearing the costs will vigorously oppose the policy, while the beneficiaries will free ride, preferring that someone else take up the cudgels.

Olson’s insight applies to the single most pressing policy challenge facing humanity today, namely climate change. The starting point for addressing it, economists agree, is a tax on carbon. The resulting reduction in emissions would deliver benefits to virtually everyone on the planet. But specific segments of society – Olson’s concentrated interests – will bear a disproportionate share of the costs and mobilize in opposition.

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