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Information Provision by Interest Groups

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  • Allard Made

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Abstract

We investigate interest groups’ incentives to inform consumers about the damaging practices of firms and the impact such an IG has on firms’ technology choices. The IG aims to reduce the production of some bad, say pollution. It can at a cost investigate firms’ production practices and inform consumers about its findings. Since consumers care about the environment, revealing differences in pollution levels between firms leads to vertical product differentiation. The information, by shifting sales from ‘dirty’ towards ‘clean’ firms, reduces pollution. We show that the IG is most inclined to investigate firms in relatively competitive industries and that the threat of being unmasked as a polluter prompts dirty firms to adopt a clean technology. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Allard Made, 2014. "Information Provision by Interest Groups," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(4), pages 649-664, August.
  • Handle: RePEc:kap:enreec:v:58:y:2014:i:4:p:649-664
    DOI: 10.1007/s10640-013-9714-3
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    References listed on IDEAS

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    1. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, March.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
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    5. Insuk Cheong & Jeong-Yoo Kim, 2004. "Costly Information Disclosure in Oligopoly," Journal of Industrial Economics, Wiley Blackwell, vol. 52(1), pages 121-132, March.
    6. Avner Shaked & John Sutton, 1982. "Relaxing Price Competition Through Product Differentiation," Review of Economic Studies, Oxford University Press, vol. 49(1), pages 3-13.
    7. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-477, June.
    8. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
    9. Banks, Jeffrey S & Sobel, Joel, 1987. "Equilibrium Selection in Signaling Games," Econometrica, Econometric Society, vol. 55(3), pages 647-661, May.
    10. Boyan Jovanovic, 1982. "Truthful Disclosure of Information," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 36-44, Spring.
    11. Thomas P. Lyon & John W. Maxwell, 2004. "Astroturf: Interest Group Lobbying and Corporate Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 561-597, December.
    12. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    13. Pim Heijnen, 2013. "Informative advertising by an environmental group," Journal of Economics, Springer, vol. 108(3), pages 249-272, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Green preferences; Information disclosure; Interest groups; Pollution; D80; L10; L31;

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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