Policy Path Dependence: Legislating Carbon Markets in the Face of Financial Crisis

This article explores the development of carbon emissions markets through analysis policy formation in the United States. Whether the markets can be developed and operate quickly enough to have an impact in mitigating greenhouse gas production will be determined in large part by how well-designed and stringent the emissions markets are. In addition to the political challenges, the carbon emissions markets now must be developed in the face of financial crisis. The conditions surrounding the development of these markets raise doubt as to whether carbon emissions markets can be successfully designed. It raises the question: are markets inevitably path-dependent, subject to historical events and driven by socio-cultural activity? Drawing insight from coalition and field stabilization theory, I argue that carbon emission market formation is path dependent, but only to the extent that it is shaped by prior existing conditions and perceptions of civil society. Case studies of policy formation the United States and California legislatures are used to demonstrate process of coalition formation and policy field stabilization. The article suggests that policy formation is a path dependent process structured by equilibrium of the motivations of the institutions that build coalitions.