When is Good News About Pro-Co-operation Lobbies Good News About Co-operation?

Lobbies are active participants in international co-operation. In a repeated game, this article allows domestic lobbies to offer contingent rewards to influence their government to make pro-co-operation policy adjustments. The effect of lobbies depends on the type and intensity of their preferences. If the lobbies are ‘internationally benefiting’ – that is, they are interested in whether the foreign government reciprocates with adjustments of its own, they unambiguously improve co-operation. However, if the lobbies are ‘domestically benefiting’ – that is, they are interested in their own government's policy, they are less beneficial for co-operation. A domestically benefiting lobby that is willing to compensate its government even without foreign reciprocity undermines the credibility of punishing free riders. This article demonstrates this argument in the context of trade and environmental co-operation.