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Firms' Choice of Regulation Instruments to Reduce Pollution: A Tansaction Cost Approach

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  • Delmas, Magali

    (U of California, Santa Barbara and Stanford U)

  • Marcus, Alfred

    (U of Minnesota)

Abstract

This paper extends transaction costs economics to analyze relationships between firms and regulatory agencies. It compares the economic efficiency of firm-agency governance structures for dealing with pollution reduction. The transaction costs of three ideal type governance structures are analyzed: command and control regulation, market based mechanisms, and negotiated agreements. We propose that the choice of governance structure will depend on the strategies firms are pursuing given their transaction attributes and market opportunities.

Suggested Citation

  • Delmas, Magali & Marcus, Alfred, 2003. "Firms' Choice of Regulation Instruments to Reduce Pollution: A Tansaction Cost Approach," Research Papers 1806, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:1806
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    References listed on IDEAS

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    1. Williamson, Oliver E, 1984. "Credible Commitments: Further Remarks," American Economic Review, American Economic Association, vol. 74(3), pages 488-490, June.
    2. Magali Delmas & Bruce Heiman, 2001. "Government Credible Commitment to the French and American Nuclear Power Industries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(3), pages 433-456.
    3. Oliver Williamson, 1970. "Administrative Decision Making and Pricing: Externality and Compensation Analysis Applied," NBER Chapters,in: The Analysis of Public Output, pages 115-138 National Bureau of Economic Research, Inc.
    4. Delmas, Magali A, 1999. "Exposing Strategic Assets to Create New Competencies: The Case of Technological Acquisition in the Waste Management Industry in Europe and North America," Industrial and Corporate Change, Oxford University Press, vol. 8(4), pages 635-671, December.
    5. Bruce Heiman & Jack Nickerson, 2002. "Towards Reconciling Transaction Cost Economics and the Knowledge-based View of the Firm: The Context of Interfirm Collaborations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 97-116.
    6. Noorderhaven, N.G., 1996. "How to make transaction cost economics more balanced and realistic," Other publications TiSEM 5defaade-4563-4df5-84d4-e, Tilburg University, School of Economics and Management.
    7. Revesz, Richard L. & Stavins, Robert N., 2007. "Environmental Law," Handbook of Law and Economics, Elsevier.
    8. Tietenberg, T H, 1990. "Economic Instruments for Environmental Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 17-33, Spring.
    9. Krupnick, Alan & Mazurek, Janice & Boyd, James, 1998. "Intel's XL Permit: A Framework for Evaluation," Discussion Papers dp-98-11, Resources For the Future.
    10. Adam B. Jaffe et al., 1995. "Environmental Regulation and the Competitiveness of U.S. Manufacturing: What Does the Evidence Tell Us?," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 132-163, March.
    11. Oxley, Joanne E, 1997. "Appropriability Hazards and Governance in Strategic Alliances: A Transaction Cost Approach," Journal of Law, Economics, and Organization, Oxford University Press, vol. 13(2), pages 387-409, October.
    12. Levy, Brian & Spiller, Pablo T, 1994. "The Institutional Foundations of Regulatory Commitment: A Comparative Analysis of Telecommunications Regulation," Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(2), pages 201-246, October.
    13. Stavins, Robert, 1998. "Market-Based Environmental Policies," Discussion Papers dp-98-26, Resources For the Future.
    14. W. J. Henisz, 2000. "The Institutional Environment for Economic Growth," Economics and Politics, Wiley Blackwell, vol. 12(1), pages 1-31, March.
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