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Voluntary Agreements under Endogenous Legislative Threats

Author

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  • Matthieu Glachant

    (CERNA, Ecole des mines de Paris)

Abstract

The paper analyzes the welfare properties of voluntary agreements (VA) with polluters, when they are obtained under the legislative threat of an alternative stricter policy option. In the model, the threat is an abatement quota. Both the threat and its probability of implementation are endogenous. The latter is the outcome of a rent-seeking contest between a green and a polluter lobby group influencing the legislature. We show that a welfare-improving VA systematically emerges in equilibrium and that it is more efficient than the pollution quota. We also discuss various VA design aspects.

Suggested Citation

  • Matthieu Glachant, 2003. "Voluntary Agreements under Endogenous Legislative Threats," Working Papers 2003.36, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2003.36
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    File URL: https://www.feem.it/m/publications_pages/NDL2003-036.pdf
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    References listed on IDEAS

    as
    1. Lyon, Thomas P. & Maxwell, John W., 2003. "Self-regulation, taxation and public voluntary environmental agreements," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1453-1486, August.
    2. Hansen, Lars Gårn, 1997. "Environmental Regulation through Voluntary Agreements," MPRA Paper 47537, University Library of Munich, Germany, revised 1999.
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    Cited by:

    1. Blackman, Allen & Lyon, Thomas P. & Sisto, Nicholas, 2006. "Voluntary Environmental Agreements when Regulatory Capacity Is Weak," Discussion Papers dp-06-30, Resources For the Future.
    2. Grajzl, Peter & Murrell, Peter, 2007. "Allocating lawmaking powers: Self-regulation vs government regulation," Journal of Comparative Economics, Elsevier, vol. 35(3), pages 520-545, September.
    3. R. Bracke & J. Albrecht & M. De Clercq, 2006. "The use of negotiated environmental agreements: from gentlemen’s agreements to binding contracts," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/415, Ghent University, Faculty of Economics and Business Administration.
    4. Grajzl, Peter & Baniak, Andrzej, 2009. "Industry self-regulation, subversion of public institutions, and social control of torts," International Review of Law and Economics, Elsevier, vol. 29(4), pages 360-374, December.
    5. Anthony Heyes & Catherine Liston-Heyes, 2005. "Economies of scope and scale in green advocacy," Public Choice, Springer, vol. 124(3), pages 423-436, September.

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    More about this item

    Keywords

    Environmental policy; voluntary agreements; bargaining; legislatures; rent seeking; rent-seeking contests;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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