Going green for gold: How firms gain a competitive edge through international environmental treaties

Climate change is one of the most significant collective action challenge humanity has ever confronted. Despite extensive efforts to resolve this issue, deterring free-riding behavior and ensuring compliance remain challenging. Previous literature identifies firms as key actors hindering collaborative environmental initiatives, including international treaties and regulations. However, this dissertation highlights the transition of firms into supporters of environmental regulation, which could alleviate the free-riding problem. In this dissertation, I argue that the effectiveness and ultimate compliance with environmental treaties depend substantially on securing support from established firms possessing green competitive advantages. This dissertation argues that environmental regulations providing excludable benefits through increased market entry barriers effectively deter firms' free-riding behavior. Firms that benefit from restricted market access actively support environmental treaty ratification and implementation to limit competition. Particularly, firms with a green competitive advantage, capable of efficiently producing environmentally friendly goods, strongly advocate for stringent environmental regulations. Once enacted, these regulations economically incentivize compliance by making green production profitable. At the national level, countries with a high concentration of competitive green firms are more likely to endorse and comply with international environmental treaties due to the economic benefits their domestic firms gain. Thus, firm-level free-riding, and by extension, state-level non-compliance, can be reduced through this incentive structure. This dissertation empirically tests the hypothesis that states with green competitive advantages are more likely to support and comply with environmental treaties, significantly influenced by firms' intensive green lobbying efforts. It emphasizes green technology as a market entry barrier, where firms holding a larger market share in green technology are considered to have greater green competitive advantages. Using cross-sectional data on the Kyoto Protocol, the analysis demonstrates that states with strong green patent market share adopt the Kyoto Protocol faster and exhibit higher compliance rates. Additionally, the research shows that firms actively engage in green lobbying when they clearly possess green competitive advantages. The findings underscore that a green competitive advantage enables firms to secure excludable benefits from market restrictions, promoting compliance and shifting their role from obstruction to active support for environmental policies. This shift highlights firms as influential actors capable of driving significant changes in domestic and international environmental regulations. By bridging the gap between environmental objectives and firms’ profit-driven behaviors, this research demonstrates that efforts to mitigate climate change can yield both environmental and economic benefits.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Political Science

Grantor

University of Illinois Urbana-Champaign

Year dc:date

2025

Author dc:creator

• Kim, Moonyoung

Contributors dc:contributor

• Dai, Xinyuan
• Pahre, Robert
• Winters, Matthew
• Prorok, Alyssa

• global environmental politics
• international environmental treaties
• climate change
• environmental regulations
• firm compliance
• green lobbying
• green patent

Statement dc:rights

• Copyright 2025 Moonyoung Kim

Language dc:language

en, eng

Handle dc:identifier

https://hdl.handle.net/2142/129563

OAI record oai:identifier

https://www.ideals.illinois.edu/oai-pmh?verb=GetRecord&metadataPrefix=etdms&identifier=oai%3Awww.ideals.illinois.edu%3A2142%2F129563