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The Informational Role of Voluntary Certification: Evidence from the Mexican Clean Industry Program

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  • Andrew D. Foster
  • Emilio Gutierrez

Abstract

In the presence of imperfect information, voluntary certification can provide an important complement to mandatory inspections as a basis for environmental regulation in low income countries. Using data from Mexico's Clean Industry Program, we show that patterns of compliance and certification by sector are consistent with a model in which selection into the voluntary program permits more efficient targeting of regulator effort. As expected given the informational role played by certification in the model, we also find evidence, for a sample of publicly traded firms, of positive stock price deviations linked to the announcement of certification.

Suggested Citation

  • Andrew D. Foster & Emilio Gutierrez, 2013. "The Informational Role of Voluntary Certification: Evidence from the Mexican Clean Industry Program," American Economic Review, American Economic Association, vol. 103(3), pages 303-308, May.
  • Handle: RePEc:aea:aecrev:v:103:y:2013:i:3:p:303-08
    Note: DOI: 10.1257/aer.103.3.303
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    References listed on IDEAS

    as
    1. Dasgupta, Susmita & Laplante, Benoit & Mamingi, Nlandu, 2001. "Pollution and Capital Markets in Developing Countries," Journal of Environmental Economics and Management, Elsevier, vol. 42(3), pages 310-335, November.
    2. Anton, W.R.Q.Wilma Rose Q. & Deltas, George & Khanna, Madhu, 2004. "Incentives for environmental self-regulation and implications for environmental performance," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 632-654, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Neda Trifkovic, 2016. "Private standards and labour productivity in the food sector in Viet Nam," WIDER Working Paper Series 163, World Institute for Development Economic Research (UNU-WIDER).
    2. K. Sudhir & Joe Priester & Matt Shum & David Atkin & Andrew Foster & Ganesh Iyer & Ginger Jin & Daniel Keniston & Shinobu Kitayama & Mushfiq Mobarak & Yi Qian & Ishani Tewari & Wendy Wood, 2015. "Research Opportunities in Emerging Markets: an Inter-disciplinary Perspective from Marketing, Economics, and Psychology," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 2(4), pages 264-276, December.
    3. Bruce G. Carruthers & Naomi R. Lamoreaux, 2016. "Regulatory Races: The Effects of Jurisdictional Competition on Regulatory Standards," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 52-97, March.

    More about this item

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • 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

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