Regulatory Unilateralism: Arguments for Going It Alone on Climate Change

Abstract

Climate change is a collective action problem that has often been analysed as a Prisoner’s Dilemma. States have an incentive to free ride on the efforts of others. Yet around the globe national and sub-national governments are introducing regulatory measures to reduce emissions that can be fairly characterised as unilateral actions. The US and China, the world’s two largest emitters, are at the forefront. Indeed the evidence of states beginning to depart from business-as-usual behaviour raises the possibility that the characterizations of climate change as a Prisoner’s Dilemma may apply less strongly to the problem and that something else may be starting to happen. Accordingly, this paper considers:

(i) to what extent nations are taking unilateral action to address climate change; and

(ii) in the context of climate change, which is considered one of the greatest global collective action problems the world has faced, what are the possible economic explanations for nations to act in a unilateral fashion and what are the normative reasons for doing so.

We justify regulatory unilateralism on economic, geopolitical and moral grounds, and argue that regulatory unilateralism may offer the best hope of triggering a race to cut emissions. A race rather than prolonged negotiations is what is required at this moment in climate history.

Keywords: climate change, emissions reduction, regulatory measures, collective action, regulatory unilateralism

JEL Classification: K29, K32