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Social norms, regulation, and environmental risk

Author

Listed:
  • Qin, Botao
  • Shogren, Jason F.

Abstract

We add social norms into Laffont’s mechanism designed for environmental risk. We find with endogenous social norms and asymmetric information about personal norms, the optimal contract induces more (less) effort from the “green” (“brown”) firm.

Suggested Citation

  • Qin, Botao & Shogren, Jason F., 2015. "Social norms, regulation, and environmental risk," Economics Letters, Elsevier, vol. 129(C), pages 22-24.
  • Handle: RePEc:eee:ecolet:v:129:y:2015:i:c:p:22-24
    DOI: 10.1016/j.econlet.2015.01.030
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    References listed on IDEAS

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    1. Posner, Richard A. & Rasmusen, Eric B., 1999. "Creating and enforcing norms, with special reference to sanctions1," International Review of Law and Economics, Elsevier, vol. 19(3), pages 369-382, September.
    2. Smith, Rodney B. W. & Shogren, Jason F., 2002. "Voluntary Incentive Design for Endangered Species Protection," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 169-187, March.
    3. Laffont, Jean-Jacques, 1995. "Regulation, moral hazard and insurance of environmental risks," Journal of Public Economics, Elsevier, vol. 58(3), pages 319-336, November.
    4. Posner, R.A. & Rasmusen, E., 1998. "Creating and Enforcing Norms, with Special Reference to Sanctions," Papers 98-005, Indiana - Center for Econometric Model Research.
    5. Roland Benabou & Jean Tirole, 2011. "Laws and Norms," NBER Working Papers 17579, National Bureau of Economic Research, Inc.
    6. Baliga, Sandeep & Maskin, Eric, 2003. "Mechanism design for the environment," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 7, pages 305-324 Elsevier.
    7. Banerjee, Prasenjit & Shogren, Jason F., 2010. "Regulation, reputation, and environmental risk," Economics Letters, Elsevier, vol. 106(1), pages 45-47, January.
    8. Paul Fischer & Steven Huddart, 2008. "Optimal Contracting with Endogenous Social Norms," American Economic Review, American Economic Association, vol. 98(4), pages 1459-1475, September.
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    Citations

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    Cited by:

    1. Prasenjit Banerjee & Rupayan Pal & Jason F. Shogren, 2016. "Honor and stigma in mechanisms for environmental protection," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-017, Indira Gandhi Institute of Development Research, Mumbai, India.
    2. Prasenjit Banerjee & Rupayan Pal, 2016. "Honor and Stigma in Mechanisms for Environmental Protection," Working Papers id:10883, eSocialSciences.

    More about this item

    Keywords

    Mechanism design; Social norms; Environmental risk;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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