Policy Alteration: Rethinking Diffusion Processes When Policies Have Alternatives

Abstract

Most analyses of policy interdependence operate under the assumption that international policy networks can be observed by focusing on the diffusion of one policy across countries. Consequently, if a focal policy is not adopted from one country to the next, researchers usually claim that interdependence is weak and diffusion may have not occurred. In this article we take issue with this argument and challenge the notion that diffusion processes and interdependence entail the same policy diffusing. We posit that national governments, which are usually confronted by a bundle of diffusing policies instead of one unique policy, are often pressed to implement the policy adopted in neighboring countries. At the same time, the decision makers' incentive to implement this instrument may rely on whether the domestic government is more or less dependent on foreign resources and, thus, the policy preferences of foreign constituents. We hold that, conditional on a neighbor's pressure to adopt a policy, choosing an alternative policy is more likely to occur in countries that are relatively less dependent on economic flows, where governments have more political leeway to model policy diffusion into their strategic advantage. We trace this alteration mechanism using two studies of environmental policy diffusion across space and time. Our analyses suggest that considering only one diffusing policy although alternatives are implemented risks underestimating policy interdependence, as well as biasing inference on the scope of policy diffusion.

Global diffusion, policy flexibility, and inflation targeting

“…This article puts the content of the policy front and center. This level of analysis has recently gained some attention in political science (Beissinger 2007;Genovese et al 2017), but is much more prominent in other disciplines, such as history and sociology, where diffusion studies provide rich qualitative insights on how international and domestic actors adapt diffusing policies to the domestic context (Chorev 2012;Howlett et al 2011). This article seeks to show how the focus on the changing content of a policy is powerful to understand global diffusion dynamics.…”

“…Surprisingly, little research, however, has studied whether and, if so, how the varying and changing characteristics of a policy itself shapes the diffusion process. A notable exception is the study by Brooks (2007), who develops the argument that specific policy features of pension reforms mediate diffusion (see also Genovese, Kern, and Martin 2017).…”

Who opposes climate regulation? Business preferences for the European emission trading scheme

“…Furthermore, the definition of benefits is relative to the nature of the policy instrument under analysis. For instance, acting 'green' may credibly benefit firms if environmental policy creates discriminatory advantages to the targeted firms (Lyon and Maxwell, 2008;Genovese et al, 2017).…”

Does green taxation drive countries towards the carbon efficiency frontier?

“…Albrizio et al (2014) include levels of environmental taxation alongside other policy instruments in a new index of environmental regulatory stringency and study the effect on productivity. Genovese et al (2016) focus on subsidies for environmental good practice as an alternative to green taxation and report evidence that these two policies may be substitutes for each other. Finally, Aghion et al (2016) rely on data on tax-inclusive fuel prices from the International Energy Agency and find that US companies are likely to invest more in clean technologies when facing higher tax-inclusive fuel prices.…”