Strategic Voting on Environmental Policy Making: The Case for "Political Race to the Top"

Yukihiro Nishimura and Kimiko Terai
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Yukihiro Nishimura: Graduate School of Economics, Osaka University
Kimiko Terai: Faculty of Business Administration, Hosei University

No CIRJE-F-794, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper explores the outcome of the noncooperative environmental decision-making under transnational externalities when the national policies are chosen by the elected politicians. Speci cally, we re-examine the extent of a voter's incentives for supporting politicians who are less green than he is, a phenomenon called \political race to the bottom". The median voter (principal) strategically appoints his delegate (agent) who independently decides the level of environmental investments (as inputs for the global public good) which generate transnational bene ts. The new feature of our model is the introduction of complementarity between public inputs, while previous studies supposed perfect substitution. Our analysis derives some new results. The extent of \political race to the bottom" diminishes as public inputs become more complementary, and if its degree exceeds a certain point, \political race to the top" emerges, without supposing e ects of other factors including international trade. We further examine the case with perfect substitution. Equilibrium is in fact asymmetric. Although one of the elected politicians pays no attention to the environment, the other country results in self-representation.

Pages: 20 pages
Date: 2011-03
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2011cf794

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