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Voluntary Pollution Abatement and Regulation

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  • Delgado, Michael S.
  • Khanna, Neha

Abstract

We consider private provision of an environmental public good and the link between voluntary pollution-abatement markets and the optimal level of mandatory environmental regulation. We show that voluntary abatement markets react to the level of mandatory abatement imposed and that an optimal regulatory policy must account for that reaction. We consider several assumptions about consumer behavior and find that the voluntary market's reaction to regulation depends on the motivating behavior of consumers. Whether the optimal level of mandatory abatement is higher than the level provided by traditional settings depends on the direction and magnitude of the voluntary market's reaction to changes in mandatory abatement.
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Suggested Citation

  • Delgado, Michael S. & Khanna, Neha, 2011. "Voluntary Pollution Abatement and Regulation," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103886, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103886
    DOI: 10.22004/ag.econ.103886
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    References listed on IDEAS

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    1. Delgado, Michael S. & Harriger, Jessica L. & Khanna, Neha, 2015. "The value of environmental status signaling," Ecological Economics, Elsevier, vol. 111(C), pages 1-11.
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    4. Jacobsen, Grant D. & Kotchen, Matthew J. & Vandenbergh, Michael P., 2012. "The behavioral response to voluntary provision of an environmental public good: Evidence from residential electricity demand," European Economic Review, Elsevier, vol. 56(5), pages 946-960.
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    9. Kotchen, Matthew J. & Moore, Michael R., 2007. "Private provision of environmental public goods: Household participation in green-electricity programs," Journal of Environmental Economics and Management, Elsevier, vol. 53(1), pages 1-16, January.
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    Cited by:

    1. Grischa Perino, 2015. "Climate Campaigns, Cap and Trade, and Carbon Leakage: Why Trying to Reduce Your Carbon Footprint Can Harm the Climate," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(3), pages 469-495.
    2. Delgado, Michael S. & Harriger, Jessica L. & Khanna, Neha, 2015. "The value of environmental status signaling," Ecological Economics, Elsevier, vol. 111(C), pages 1-11.

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    Environmental Economics and Policy;

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