Certification as a Rationale for Voluntary Agreements
AbstractI model the participation of firms in a voluntary agreement as a costly certification process whereby a firm informs the Regulator of its pollution intensity. Without this knowledge, the Regulator imposes the same tax on all firms in a heterogeneous industry, unduly hurting the clean ones with the lowest intensity. Certification allows clean firms to get a tax rebate. It also entails an informational externality as the dispersion of types decreases within the pool of non-participating firms, following an unraveling process. Because participation is a firm’s private decision, there is such a thing as a bad voluntary agreement.
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Bibliographic InfoPaper provided by CREATE in its series Cahiers de recherche CREATE with number 2011-2.
Date of creation: 2011
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Certification; voluntary agreements; Pigovian taxes; pollution;
Other versions of this item:
- Gonzalez, Patrick, 2011. "Certification as a Rationale for Voluntary Agreements," Working Papers, 117827, .
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
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