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Why regulators adopt voluntary programs: a theoretical analysis of voluntary pollutant reduction programs

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  • Takuro Miyamoto

    (Waseda University)

Abstract

To explain why regulators continue to implement voluntary emission reduction programs (VP), this study presents a model with multiple polluting firms, a trade association, a regulator, and a legislator who sets a mandatory standard and is politically influenced by the trade association, a representative of the polluting firms. We show that the regulator can implement a voluntary program, which generates less social cost and more aggregate abatement than a mandatory standard. We also find that assigning the greatest importance to the abatement rates of individual firms generates the highest level of social welfare if the damage due to individual firms’ emissions does not depend on other firms’ emissions. However, the importance of the participation rate will increase relatively to the abatement rate as the damage due to individual firms’ emissions becomes more sensitive to other firms’ emissions.

Suggested Citation

  • Takuro Miyamoto, 2016. "Why regulators adopt voluntary programs: a theoretical analysis of voluntary pollutant reduction programs," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(4), pages 599-623, October.
    • Handle: RePEc:spr:envpol:v:18:y:2016:i:4:d:10.1007_s10018-015-0133-2
    DOI: 10.1007/s10018-015-0133-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Environmental policy; Lobbying; Voluntary programs; Cooperation under threat; free riding;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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