Negotiating a Voluntary Agreement When Firms Self-Regulate
AbstractDoes self-regulation improve social welfare? We develop a policy game featuring a regulator and a firm that can unilaterally commit to better environmental or social behavior in order to preempt future public policy. We show that the answer depends on the set of policy instruments available to the regulator. Self-regulation improves welfare if the regulator can only use mandatory regulation: it reduces welfare when the regulator opts for a voluntary agreement. This suggests that self-regulation and voluntary agreements are not good complements from a welfare point of view. We derive the policy implications, and extend the basic model in several dimensions.
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Bibliographic InfoPaper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00529632.
Date of creation: 2011
Date of revision:
Publication status: Published, Journal of Environmental Economics and Management, 2011, 62, 1, 41-52
Note: View the original document on HAL open archive server: http://hal-ensmp.archives-ouvertes.fr/hal-00529632
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Web page: http://hal.archives-ouvertes.fr/
Self-Regulation; Negotiation; Regulation Preemption; Voluntary Agreement;
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