Firms’ Support for Climate Change Legislation: Industry Competition and the Emergence of Green Lobbies
Policies to mitigate global climate change entail significant economic costs. Yet a growing number of firms lobby actively in favor of regulation to mitigate carbon emissions. Why do firms support environmental policies that directly increase production costs? By imposing differential costs on market participants, policies designed to mitigate carbon emissions shift market share towards firms with low anticipated adjustment costs. I develop a model of climate change policy making in the presence of market competition and show how heterogeneity in adjustment costs induces a preference for regulation among low-cost firms. Reducing adjustment costs for high-cost firms may lead to worse regulatory outcomes by eroding political demand for regulation. I test these arguments using firm-level data on lobbying in the U.S. Congress and find strong support: firms anticipating high competitor adjustment costs are more likely to lobby in favor of climate change legislation. The paper is available here.
The Politics of Participation in WTO Accession Negotiations
While multilateral negotiations are stalled the work of the WTO in elaborating global trade rules continues through other channels. Accession negotiations provide one venue in which existing agreements are interpreted and amended in entirely new ways. Since the collapse of the Doha Round these negotiations have grown in breadth and depth and now touch upon the most contentious issues in contemporary trade politics. To test these arguments I consider the timing of Member states’ participation in accession negotiations. Using text analysis and a novel corpus of negotiating documents I demonstrate that Members are more likely to participate when they anticipate that the precedential value of negotiations may be high. I test these arguments against a variety of alternative explanations. I find some support for the role of economic self- interest, but show that this motivation may be blunted by incentives to free-ride on the largest Members in the system.