Believers vs. deniers: Climate change and environmental policy polarization

Leyla D. Karakas, Devashish Mitra

Research output: Contribution to journalArticlepeer-review

Abstract

This paper theoretically studies the consequences of partisanship with an application to environmental policy. We model an election between a right-wing and a left-wing candidate who strategically propose environmental policies to gain the support of an electorate divided based on their climate change beliefs and productive assets. While environmental regulations imply a trade-off between a more sustainable environment and higher incomes for all voters, climate change believers have a higher belief in human activity-induced climate change, which translates into greater expected environmental benefits from policy, and high-asset voters care relatively more about mitigating economic costs. Voters view the left-wing candidate as more effective in addressing environmental challenges, whereas her right-wing opponent is the better candidate to deliver relief from the economic burden of regulations. In equilibrium, there exists policy divergence and the right-wing candidate always proposes the more pro-industry policy. We find that higher asset inequality moves equilibrium policies in a pro-industry direction as long as high-asset voters are ideologically more homogeneous than low-asset ones. Equilibrium policies become further polarized with greater partisanship as those voters with the same climate change belief hold similar ideologies.

Original languageEnglish (US)
Article number101948
JournalEuropean Journal of Political Economy
Volume65
DOIs
StatePublished - Dec 2020

Keywords

  • Downsian competition
  • Environmental regulations
  • Partisanship

ASJC Scopus subject areas

  • Economics and Econometrics
  • Political Science and International Relations

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