Aumann and Schelling win the Nobel Prize in economics. Game Theorists rejoice. From the NYTimes (Game Theorists Win Nobel Prize for Economics ):
Robert J. Aumann and Thomas C. Schelling won the 2005 Nobel Memorial Prize in Economic Sciences on Monday for their work in game theory that explains political and economic conflicts, arms races and even preventing warfare.
The field of environmental economics can lay partial claim to Schelling. In his March 1992 AEA president's American Economic Review article, "Some Economics of Global Warming," he demonstrates 20/20 foresight:
If the developed countries ever manage to act together toward the developing countries, their bargaining position is probably enhanced by the fact that cleaner fuels and more efficient fuel technologies bring a number of benefits other than reduced carbon, and recipients of greenhouse aid will be actively interested parties, not merely neutral agents attending to the global atmosphere. At the same time, large nations like India and China will be aware of the extortionate power that resides in ambitious coal-development projects.
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Maybe there is a role here for the carbon tax. Western Europe, North America, and Japan will be burning 3 or 4 billion tons of carbon per year for the next decade. Taxing themselves, that is, contributing in proportion to the carbon they consume, at one, two, or three dollars per ton, they could contribute to a fund that might begin at $3 billion per year and grow to $10 billion. The carbon tax is a little arbitrary here, and a U.S. administration may be wary about a precedent that carries over when the tax rises an order of magnitude, but compared with alternative criteria for sharing costs it might not even be a bad precedent.
Still true today?