ON SHIBATA'S NEGATION OF LUMP-SUM TRANSFERS IN GLOBAL WARMING CONTROL: REJOINDER

Kohn's criticism of my negation of the role of lump-sum transfers financed by a global emission tax is based on two unacceptable premises. (1) He assumes a world consisting of cooperative nations. But if nations were cooperative no corrective tax is needed as they could internalize external diseconomies without a super national governmental intervention. A global tax analysis must assume non-cooperative nations as I did. (2) He treats lump-sum transfers as negotiable payments for compliance by the country unfavorable affected by the tax. But the standard interpretation of the lump-sum transfers is payments that do not influence private economic decisions. In my analysis lump-sum transfers have their usual interpretation. This rejoinder also reinforces my original claim with a formal proof that every nation's post-tax welfare is independent of lump-sum transfers and of their aggregate resources. [F02, H23, Q23, Q25]