To Comply or Not to Comply? That is the Question! The Puzzle of Self-Regulation in European Environmental Policy

Research question/goal: 

This project investigates the strategic role of information in international environmental agreement-making. While information is always welfare-enhancing when there is only one single decision-maker, information can reduce social welfare in strategic contexts. To elaborate on this effect in the context of international cooperation on climate change, we develop two game-theoretic models and test their implications empirically. Both models feature two countries that can take costly emission abatement, which is a positive externality in both countries. These countries differ ex post in their marginal benefits from abatement, and the first model conceives of the countries as unitary actors, while the second model includes domestic voters with electoral control power. From these analyses we find that absent electoral competition better information undermines cooperation if marginal benefits between the two countries are sufficiently asymmetric. In the model with domestic electoral dynamics, in contrast, cooperation can be sustained when countries are democratic and information is low. Consistent with the findings in the literature that information can have negative social value, our model allows us to derive that the cooperative potential of democracies decreases with information. The better informed voters are in low-benefitting countries, the less likely they are in supporting costly abatement action. Low returns from emission reduction and the knowledge thereof incentivises governments to refrain from cooperation due to the electoral threat to be thrown out of office. Simple simulations put this result into perspective and illustrate that information has negative social value for a broad range of parameter specifications. We test, in particular, the hypothesis that democratic cooperation reduces with information. For this, we use binary cross-sectional time-series data as well as parametric and semi-parametric duration models for 189 countries that ratified the Kyoto Protocol. We find strong support for our hypothesis: democracies ratify the Kyoto Protocol faster than autocratic regimes, but this effect decreases statistically significantly the better informed democratic voters are. We show that in strategic contexts information can indeed have negative effects on international cooperation.

Fact sheet

CDSS, Studienstiftung des Deutschen Volkes
2008 to 2011
Data Sources: 
Macro data, EU data, environmental data
Geographic Space: