Patchwork rules and industry strategy

In many states, a disjoint can be seen between action being taken on climate change at the state or provincial level and inaction at the federal level. Some people argue that such approaches are fundamentally inefficient because they increase uncertainty and the cost of compliance. While this is true in a static sense, it ignores an important element of game theory. Generally, the moment at which it becomes possible to effectively regulate an environmental problem is the moment when industry decides that some form of regulation is inevitable. It then switches its attention from lobbying for total inaction to lobbying for the kind of regulatory regime that suits business best: something as large-scale as possible, with long enough time horizons to guide investment decisions.

This is certainly the pattern that was observed with ozone depletion. Industry went from saying: “There’s no problem” to saying: “There’ a bit of a problem, but it would bankrupt us to fix” to realizing that regulation was inevitable, lobbying for a kind that suited them, and developing superior alternatives to CFCs within a year.

As such, it is entirely possible that grumbling about a “patchwork of regional approaches” signals the approach of an inflection point, beyond which effective regulation and large-scale industry and consumer adaptation occurs.

Author: Milan

In the spring of 2005, I graduated from the University of British Columbia with a degree in International Relations and a general focus in the area of environmental politics. In the fall of 2005, I began reading for an M.Phil in IR at Wadham College, Oxford. Outside school, I am very interested in photography, writing, and the outdoors. I am writing this blog to keep in touch with friends and family around the world, provide a more personal view of graduate student life in Oxford, and pass on some lessons I've learned here. View all posts by Milan