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Negotiating a Voluntary Agreement When Firms Self-Regulate

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Author Info

  • Pierre Fleckinger

    (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)

  • Matthieu Glachant

    (CERNA - Centre d'économie industrielle - MINES ParisTech - École nationale supérieure des mines de Paris)

Abstract

Does 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 Info

Paper provided by HAL in its series Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) with number hal-00529632.

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Date of creation: 2011
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Publication status: Published, Journal of Environmental Economics and Management, 2011, 62, 1, 41-52
Handle: RePEc:hal:cesptp:hal-00529632

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/

Related research

Keywords: Self-Regulation; Negotiation; Regulation Preemption; Voluntary Agreement;

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