Marcel Boiteux and the Three Domains: Lessons from an Unexpected Encounter

The author uses the work of Marcel Boiteux and the 'three domains' framework to critique modern climate economics for neglecting the role of finance and the complexities of real-world implementation. By examining Boiteux's contributions to electricity pricing and the Ramsey-Boiteux rule, the text argues that economic analysis should serve as a 'negotiation language' to align technical efficiency with political goals and financial realities, particularly to bridge the gap between the 'North's' focus on carbon pricing and the 'South's' need for finance.

• Modern climate change economics has largely ignored the role of finance, creating a disconnect between developed nations ('North') advocating for carbon prices and developing nations ('South') requiring access to finance, especially following the Covid-19 pandemic.
• The author argues that economists have tended to restrict their toolkit to a 'second domain' of economic rationality, isolating it from the 'first domain' of frictions and the 'third domain' of irrational drifts and strategic visions.
• Marcel Boiteux's work on electricity pricing demonstrated that marginal cost pricing is insufficient when cost curves are discontinuous or when there are increasing returns, leading to the Ramsey-Boiteux rule which balances collective interest with budgetary equilibrium.
• Economic analysis should be viewed as a 'negotiation language' used to align different policy domains, as evidenced by Boiteux's ability to build a broad alliance for the French nuclear program by balancing technical, financial, and political risks.
• Current Integrated Assessment Models (IAMs) often overlook the 'microeconomic paradox' of under-investment in projects with reasonable returns (4% to 6%) because they assume carbon price signals alone will drive investment, ignoring high upfront capital costs and financial system obstacles.

APA

Hourcade, J.-C. (2021). Marcel Boiteux and the Three Domains: Lessons from an Unexpected Encounter. Climate Strategies. https://climatestrategies.org/marcel-boiteux-and-the-three-domains-lessons-from-an-unexpected-encounter/

Chicago

Hourcade, Jean-Charles. Marcel Boiteux and the Three Domains: Lessons from an Unexpected Encounter. Climate Strategies, 2021. https://climatestrategies.org/marcel-boiteux-and-the-three-domains-lessons-from-an-unexpected-encounter/.

Wikipedia

{{cite press release |last1=Hourcade |first1=Jean-Charles |title=Marcel Boiteux and the Three Domains: Lessons from an Unexpected Encounter |publisher=Climate Strategies |date=25 June 2021 |url=https://climatestrategies.org/marcel-boiteux-and-the-three-domains-lessons-from-an-unexpected-encounter/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{hourcade2021marcel, author = {Hourcade, Jean-Charles}, title = {{Marcel Boiteux and the Three Domains: Lessons from an Unexpected Encounter}}, publisher = {Climate Strategies}, year = {2021}, month = jun, url = {https://climatestrategies.org/marcel-boiteux-and-the-three-domains-lessons-from-an-unexpected-encounter/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }