Impacts of International Lobby Groups on International Environmental Agreements

Abstract

This paper is a theoretical study of the impact of international interest groups on the formation of an international market for emission permits. A three-stage non-cooperative game is considered. In the first stage, the governments decide on the formation of the international market. In the second stage, each country chooses the number of permits. In the third stage, the permits are traded. International and national lobbies try to influence governments in the first two stages. We find that in a pressured stance in favor of the international market, the formation of an international lobby group against an international market raises the contributions of national lobbies that support an international market well above the level that makes the governments indifferent. We also find that in the absence of the international market, the formation of an international green lobby group decreases both domestic and global emission levels. But if an international market is formed, the impact of international lobby groups is ambiguous.