Policy Diffusion of Emission Standards Is There a Race to the Top?

Abstract

In a dramatic example of policy diffusion, the past three decades have witnessed the spread of automobile emission standards throughout the world. Contrary to fears that global competition would produce a race to the bottom, there appears to be a race to the top, not only among rich countries but also among poor ones. Using econometric analysis of the adoption of automobile emission standards over the past twenty years for 129 countries, the author argues that this global diffusion results from countries' efforts to stay competitive in the international market. Due to the pressure from importing countries that have adopted stringent emission standards, even developing countries have rapidly moved to adopt rich country standards. The evidence shows that adoption of automobile emission standards correlates with an increase in the total value of automobile exports. Under some conditions, economic incentives in a global market can be a complement to environmental protection.