When and how can unilateral policies promote the international diffusion of environmental policies and clean technology?

Abstract

How can governments manage transnational problems when other governments refuse to cooperate? We examine the conditions under which regulation in one jurisdiction can induce other jurisdictions to regulate. The analysis emphasizes the relationship between public policy, private actors, and technological change. We find that ambitious regulations in large markets can induce private actors to make technological changes that lower the cost of regulation for less ambitious jurisdictions. Our model specifies the conditions under which such transboundary effects are possible, qualifying the received wisdom on global collective action by outlining conditions under which unilateral regulatory leadership can be effective. Case studies of wind turbines and photovoltaic cells provide empirical support.