Firms’ Support for Climate Change Legislation: Industry Competition and the Emergence of Green Lobbies
Legislative efforts to curb carbon emissions are projected to increase production costs across the board. Yet a broad-based coalition of firms has emerged in support of both domestic legislation and international cooperation on mitigation efforts. Why do firms lobby in support of environmental policies that directly increase their costs of production? By imposing differential costs on market participants, policies designed to mitigate carbon emissions shift market share towards firms with low anticipated adjustment costs. This shift in market share increases profitability, compensating for the policy’s direct costs. I develop a game theoretic 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 then lead to worse regulatory outcomes by eroding political demand for regulation by low-cost competitors.
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.