A California Effect for International Environmental Externalities?

Johannes Urpelainen

International Interactions, 2011, vol. 37, issue 2, 170-189

Abstract: An influential conventional wisdom holds that globalization could induce upward convergence in environmental regulations. Wealthy countries impose environmental regulations that prompt exporters in other countries to adopt sustainable production techniques, so the cost of environmental regulation in these countries decreases. However, previous research has only examined this California Effect for environmental regulations to address domestic externalities. I formally investigate the case of international externalities, such as global warming or ozone depletion. I find that a country can exercise leadership by enacting environmental regulations to strategically induce other countries to regulate in the future, but only if the incentive to free ride is not too strong. Surprisingly, under deep economic integration, environmental regulations are strategic complements with positive spillovers, so that international coordination is necessary to capitalize on the California Effect. In addition to showing that the California Effect is a powerful instrument of environmental statecraft, the results suggest new reasons why liberal trade and investment policies might improve environmental protection. They can also inform a strategy to promote efforts to mitigate global warming.

Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/03050629.2011.568855 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:ginixx:v:37:y:2011:i:2:p:170-189

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GINI20

DOI: 10.1080/03050629.2011.568855

Access Statistics for this article

International Interactions is currently edited by Michael Colaresi and Gerald Schneider

More articles in International Interactions from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().