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Voluntary Emission Reductions, Social Rewards, and Environmental Policy


  • Michael Rauscher


Social norms and intrinsic motivations lead to environmentally friendly behaviour even in the absence of environmental policy. This paper looks at the interactions of social norms and environmental regulation in their impact on individual behaviour. People obtain social rewards for voluntary abatement efforts. These social rewards may be crowded out by environmental regulation taking the shape of standards or taxes. Moreover, the paper shows that environmental externalities and externalities related to social norms interact and that an optimal environmental policy should consider both types of externalities. From a general welfare point of view, emission taxes are superior to emission standards, but people responsive to social rewards prefer standards.

Suggested Citation

  • Michael Rauscher, 2006. "Voluntary Emission Reductions, Social Rewards, and Environmental Policy," CESifo Working Paper Series 1838, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_1838

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    References listed on IDEAS

    1. Cardenas, Juan Camilo & Stranlund, John & Willis, Cleve, 2000. "Local Environmental Control and Institutional Crowding-Out," World Development, Elsevier, vol. 28(10), pages 1719-1733, October.
    2. Myles, Gareth D. & Naylor, Robin A., 1996. "A model of tax evasion with group conformity and social customs," European Journal of Political Economy, Elsevier, vol. 12(1), pages 49-66, April.
    3. Lai, Ching-Chong & Yang, Chih-Yu & Chang, Juin-Jen, 2003. "Environmental Regulations and Social Norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 63-75, January.
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    5. Naylor, Robin, 1990. "A social custom model of collective action," European Journal of Political Economy, Elsevier, vol. 6(2), pages 201-216, October.
    6. Gachter, Simon & Fehr, Ernst, 1999. "Collective action as a social exchange," Journal of Economic Behavior & Organization, Elsevier, vol. 39(4), pages 341-369, July.
    7. Frey, Bruno S., 1993. "Motivation as a limit to pricing," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 635-664, December.
    8. Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough or Don't Pay at All," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 791-810.
    9. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-817, August.
    10. Frey, Bruno S, 1986. "Economists Favour the Price System--Who Else Does?," Kyklos, Wiley Blackwell, vol. 39(4), pages 537-563.
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    Cited by:

    1. Eyckmans, Johan & Kverndokk, Snorre, 2010. "Moral concerns on tradable pollution permits in international environmental agreements," Ecological Economics, Elsevier, vol. 69(9), pages 1814-1823, July.
    2. Elisabeth Gsottbauer & Jeroen Bergh, 2011. "Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(2), pages 263-304, June.
    3. Lundgren, Tommy & Marklund, Per-Olov, 2012. "Environmental Performance and Profits," CERE Working Papers 2012:8, CERE - the Center for Environmental and Resource Economics.
    4. Lundgren, Tommy & Olsson, Rickard, 2008. "How Bad is Bad News? Assessing the Effects of Environmental Incidents on Firm Value," Sustainable Investment and Corporate Governance Working Papers 2008/1, Sustainable Investment Research Platform.
    5. Erik Gawel, 2001. "Intrinsische Motivation und umweltpolitische Instrumente," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 2(2), pages 145-165, May.
    6. Brekke, Kjell Arne & Nyborg, Karine, 2010. "Selfish bakers, caring nurses? A model of work motivation," Journal of Economic Behavior & Organization, Elsevier, vol. 75(3), pages 377-394, September.
    7. Nyborg, Karine, 2011. "I don't want to hear about it: Rational ignorance among duty-oriented consumers," Journal of Economic Behavior & Organization, Elsevier, vol. 79(3), pages 263-274, August.
    8. Tommy Lundgren & Per-Olov Marklund, 2015. "Climate policy, environmental performance, and profits," Journal of Productivity Analysis, Springer, vol. 44(3), pages 225-235, December.

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