Explaining Unilateral Cooperative Actions: The Case of Greenhouse Gas Regulations

The politico-economic literature has a tendency to discard the importance of unilateral measures of cooperation taken by individual states or local entities. This is particularly the case for greenhouse gas (‘GHG’) emission reductions. Often, such efforts are portrayed as being either useless or even counterproductive because of leakage effects. This paper aims at showing that a case can be made for such unilateral efforts under two conditions: first, if greenhouse gas reductions have ancillary benefits; and second, and more importantly, when the probability of the implementation of a global regulatory framework increases. Such an increase will induce investors to abandon investments in high carbon producing technologies for low carbon ones. Moreover, it will lead more and more countries and local entities to introduce regulatory frameworks, which, in turn, restrict the use of high carbon production methods.