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State policies shape firms’ incentives to lobby in the United States, but the existing lobbying literature mostly ignores these incentives. Using lobbying records for all electric utilities in the United States from 1998 to 2012, we examine how state policies affect federal lobbying by both proponents and opponents of federal support for the renewable energy policy. Our theory predicts that supportive state policies reduce the returns to lobbying by both proponents and opponents. Empirically, we show that when the federal production tax credit for renewable energy is about to expire, electric utilities from states without renewable portfolio standards become more likely to lobby than those from states with these policies. Because the timing of the expiration of the production tax credit is quasi-random, these findings carry a causal interpretation. Using text analysis techniques, we also show that the lobbying efforts are focused on energy and environmental issues while lobbying on unrelated topics remains unaffected.
We examine unequal outcomes in the implementation of India’s national rural electrification program in Uttar Pradesh. We ask two questions: (1) to what extent did Dalits, the lowest group in India’s caste hierarchy, receive less attention when the state electrified rural communities? (2) Was BSP, the state’s Dalit party, able to reduce this inequality? Using data from a hundred thousand villages, we provide robust evidence for unequal outcomes. Villages inhabited solely by Dalits were 20 percentage points less likely to be covered by the program than villages without any Dalits. Moreover, a regression discontinuity analysis shows that the electoral success of BSP failed to reduce such differences. These results highlight the magnitude and persistence of caste inequality in the implementation of democratic public policy, despite political representation.
When and why do individual companies lobby on environmental policies? Given the structural strength of business interests, the answer to this question is important for explaining policy. However, evidence on the strategic lobbying behaviour of individual companies remains scarce. We use data from lobbying disclosure reports on all major climate bills introduced during the 111th Congress (2009–2010). We then link the lobbying disclosure reports to detailed data on the fuel choices of all electric utilities in the United States along with socioeconomic, institutional and political data from the states where the utilities operate. The expected winners (renewable energy, natural gas users) from climate policy are much more likely to lobby individually on federal legislation than the expected losers (coal users). We find that expected winners lobby for specific provisions and rents as a private good, whereas expected losers concentrate their efforts on collective action through trade associations and committees to prevent climate legislation. The results suggest that the supporters of climate policy believed the probability of federal climate legislation to be nontrivial.
Previous research on deregulation in industrialised countries emphasises differences between left-wing and right-wing parties, but data on product market regulation (PMR) indicate that these differences have been modest. If partisan preferences on the merits of deregulation differ sharply, why such modest differences? We argue that partisan differences only become pronounced when the government is strong and rules a relatively unified legislature. Thus, legislative fragmentation should reduce the left-right difference in PMR. We test this theory against PMR data in 29 industrialised countries, 1978–2007. We find that right-wing governments only have a strong negative effect on regulation if the legislature and the government are not fragmented.
Democratization in the developing world is, according to Samuel Huntington, “an important—perhaps the most important—global political development of the late twentieth century.” While scholars of comparative politics have explored the domestic political economy of democratic transitions, they, along with scholars of international relations, also recognize that international actors, particularly international organizations (IOs), are crucial for successful political transformation.
Why do states create overlapping international institutions? This practice presents a puzzle: conventional wisdom suggests that states should use existing institutions to minimize the transaction costs of co-operation. This article proposes a bargaining approach to explain the de novo creation of overlapping international institutions. In this model, a dissatisfied ‘challenger’ state threatens to create a new institution, and a ‘defender’ state can propose to reform the currently focal institution. Overlapping institutions are created when the currently focal institution is (1) captured by interests opposed to the challenger and (2) domestic political pressure to abandon the status quo is intense. Similar to models of deterrence, the expectation that the new institution garners support among third parties is irrelevant for the equilibrium likelihood of de novo creation. A comparative analysis of international bargaining over energy, whaling and intellectual property rights provides empirical evidence.
National governments have intensified their attempts to create international institutions in various policy fields such as the environment, finance and trade. At the same time, many subnational policy makers have begun to duplicate international efforts by setting their own, stricter policies while others remain inactive or enact more lax regulation. This ‘glocalization’ of policy creates a complex and potentially costly patchwork system of regulations. To shed light on this phenomenon, this article analyzes the interaction between subnational and national governments within a game-theoretic model of international treaty negotiations. The glocalization of regulatory policy can be understood as an attempt by subnational policy makers to strategically constrain or empower national governments in international negotiations. The study finds that the shadow of international treaty formation gives rise to within-country and cross-country policy balancing dynamics that may explain some of the subnational policy polarization that is currently observable in many countries. The article specifies the conditions under which these dynamics occur, spells out empirically testable hypotheses and identifies possible theoretical extensions.
Bureaucrats working in international intergovernmental organizations (IGOs) regularly help states design new IGOs. Sometimes international bureaucrats possess limited discretion in institutional design; sometimes, they enjoy broad discretion. In fact, they gain discretion even when they openly oppose state preferences. This contravenes conventional thinking about delegation: discretion should decrease as preference divergence between states and international bureaucrats increases. We develop a principal-agent theory of how much discretion states grant to international bureaucrats in the design of new IGOs. This is novel: while principal-agent theories of international delegation are common, scholars have not analyzed principal-agent relationships in the creation of new IGOs. We argue that even an international bureaucracy that disagrees with states' design preferences may enjoy substantial design leeway, because of states' need for bureaucratic expertise. In developing this argument, we employ a formal principal-agent model, case studies, and an original data set.
Lobbies are active participants in international co-operation. In a repeated game, this article allows domestic lobbies to offer contingent rewards to influence their government to make pro-co-operation policy adjustments. The effect of lobbies depends on the type and intensity of their preferences. If the lobbies are ‘internationally benefiting’ – that is, they are interested in whether the foreign government reciprocates with adjustments of its own, they unambiguously improve co-operation. However, if the lobbies are ‘domestically benefiting’ – that is, they are interested in their own government's policy, they are less beneficial for co-operation. A domestically benefiting lobby that is willing to compensate its government even without foreign reciprocity undermines the credibility of punishing free riders. This article demonstrates this argument in the context of trade and environmental co-operation.
When and how can advocacy groups influence the diffusion of new technologies, such as wind power? We examine the relationship between two different strategies that advocacy groups can adopt: political lobbying and campaigns aimed at potential end users of the new technology. Our game-theoretic analysis shows that without the opportunity to engage in political lobbying, end user campaigns by an advocacy group have the counterproductive effect of reducing the government's incentive to subsidise the new technology. Instead of supporting the advocacy group's campaigning, the government free rides on the social movement's campaigning efforts. While political lobbying cannot prevent free riding, it increases the government's incentive to subsidise the new technology, and thus increases the advocacy group's payoff. These findings suggest that advocacy groups can promote technology diffusion if they can effectively deploy a dual strategy of political lobbying and end user campaigning.
What determines state participation in regulatory regimes? This article argues that if international regulation creates markets for new technologies, innovative companies support the ratification of the relevant regulatory treaties. Consequently, technological innovativeness should have a positive effect on regulatory treaty ratification. From the harmonization of telecommunication technology to pesticide regulation, many regulatory treaties create new product markets, so the argument applies to a variety of regulatory issues. This hypothesis is tested against data on the ratification of two major multilateral treaties for pesticide control: the 1998 Rotterdam Convention and the 2001 Stockholm Convention. Countries that are capable of biotechnology innovation are found to be more likely to ratify each treaty. The findings suggest that (1) technology innovation is key to regulatory treaty ratification and (2) constituency preferences for regulatory treaties are contingent upon expected profits from innovation. More broadly, the article emphasizes the importance of technological factors for international co-operation.
Is technology competition between commercial rivals an impediment to international co-operation? Or could it instead help states collaborate? Our game-theoretic model suggests that technology competition impedes international co-operation when states hold ‘techno-nationalist’ preferences but have starkly asymmetric abilities to capture new markets. States that expect to lose refuse to co-operate, so treaty formation fails. However, technology competition may also facilitate co-operation. While states invest in new technologies out of self-interest, doing so also reduces consumer prices for other states. Comparative case studies of environmental co-operation demonstrate the model's utility. For example, European co-operation on climate policy was easier to achieve because forerunner countries, such as Denmark and Germany, implemented industrial policies that enhanced the competitiveness of their renewable energy industries. This technology competition reduced the cost of renewable energy for other European countries, and thus lowered the economic costs of their emissions reductions.
States frequently disagree on the importance of cooperation in different issue areas. Under these conditions, when do states prefer to integrate regimes instead of keeping them separated? We develop a strategic theory of regime integration and separation. The theory highlights the nature of spillovers between issues. Positive spillovers exist when cooperation in one issue area aids the pursuit of objectives in another issue area; negative spillovers exist when cooperation in one issue area impedes this pursuit in another issue area. Conventional wisdom suggests that both positive and negative spillovers foster greater integration. We argue that negative spillovers encourage integration while positive spillovers do not. States integrate not to exploit positive spillovers between issues but to mitigate negative spillovers. To test our theory, we examine the degree of integration or separation among environmental regimes.
International cooperation often requires costly policy adjustments. States may worry, however, that such adjustments weaken their outside options, and thus reduce their bargaining power. How does uncertainty about the effects of policy adjustments on outside options influence the depth of cooperation that states can achieve? My game-theoretic analysis shows that uncertainty about outside options is an obstacle to deep cooperation. If states agree on deep cooperation, they have to compensate vulnerable states with weak outside options for their losses. Under uncertainty, states that are not vulnerable have an incentive to falsely claim that they are vulnerable (i) to avoid a side payment or (ii) to obtain compensation for being vulnerable. The result holds even if the added value of deep cooperation would be large enough to fully compensate the losers. In equilibrium, the more vulnerable state sometimes offers a side payment to the less vulnerable one. More broadly, the analysis reveals a new international cooperation problem and provides a new rationale for costly signaling mechanisms and delegation to international organizations.
Two leaders engaged in international co-operation must each build trust by credibly signalling that they will not exploit the other by defecting at the implementation stage. Previous research does not reveal the difficulty and cost of such international reassurance. The role that costly adjustments by markets play in international reassurance is analysed, showing that fully efficient information revelation can be achieved when market actors under intense competitive pressures undergo sufficiently costly adjustments in expectation of international co-operation. ‘Nice’ leaders can reveal their true preferences simply by saying they intend to co-operate, because ‘mean’ leaders are unwilling to mislead market actors into undergoing futile costly adjustments. However, market imperfections prevent full information revelation unless market actors prefer international co-operation to the status quo.
I examine enforcement and capacity building in international cooperation. In a game-theoretic model, a wealthy donor gives foreign aid in exchange for policy implementation by a poor recipient. The recipient has limited capacity to comply with international agreements, so the donor is not sure if cooperation failure is caused by willful disobedience or unintended error. I show that if perceived cooperation failure prompts reciprocal suspension of cooperation, the donor and recipient have a common preference for capacity building. But when the donor can request compensation for perceived cooperation failure, it only chooses to build capacity if cooperation is otherwise impossible. Consequently, the choice of enforcement mechanism shapes capacity building. This result lays a foundation for a genuine synthesis between the enforcement and managerialist schools of compliance. It generates falsifiable hypotheses and explains why reciprocal enforcement, which unfortunately inflicts collateral damage on the victim, is often considered legitimate.
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