We argue that such green protectionism can play a strategic role in fostering international coordination on climate action. In a simple model combining a standard abatement game with a beggar-thy-neighbor game, we show that protectionist policies improve welfare when expected distortions are low, as they facilitate coordination on climate mitigation at minimal costs. When expected distortions are high, protectionist measures are not adopted and are effectively welfare-neutral. However, when expected distortions are of intermediate size, unregulated protectionist climate policies lead countries to rely excessively on distortive instruments, reducing global welfare. Our findings suggest that regulators like the WTO can enhance welfare by restricting but not entirely banning green protectionist measures. When countries are asymmetric, the case for differentiated regulation depends on whether asymmetries primarily affect countries’ incentives to coordinate on abatement or the social cost of using protectionist instruments to sustain that coordination. We further find that efforts to reduce uncertainty about the size of distortions might backfire, inadvertently encouraging coordination on costly protectionist measures.

Positive identity expression externalities lead individuals to increase their exposure to out-group identity expression, while negative externalities lead them to reduce it. At the same time, to the extent that identity expression is tied to market consumption, fiscal policy can influence how much identity is expressed by affecting individuals’ disposable income. We develop a theoretical framework in which identity expression externalities are addressed through these two channels: individuals privately adjust their social contacts to manage exposure, while local governments can use taxation to influence the visibility of identity in shared spaces. We study how these mechanisms interact, and how policy depends on which social group the government prioritizes and whether individuals react favorably or unfavorably to out-group expression. We find that governments amplify the behavioral response to diversity by adjusting the intensity of identity signaling through tax policy. We also show that greater openness to diversity can reduce demand for taxation, leading to more visible identity expression but also more private avoidance. The framework can accommodate a range of political-economy, fiscal, and institutional extensions.

I find that norms of compromise are able to invert the relationship between stable cooperation and polarization by changing individual risks of leaving the grand coalition. For example, polarization can stabilize cooperation under norms with high sensitivity to moderates' preferences and destabilize it under norms with low sensitivity. I also find that skewing moderate preferences towards extremists makes the same extremists less willing to cooperate under some norms and more willing to cooperate under others. These results highlight the importance of considering the interaction between diversity and culture to establish the causal effects of diversity on cooperation. They also shed light on how norms interact with cooperative efforts in uncertain political environments involving diverse political actors, like social movements.