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Negotiating a Voluntary Agreement When Firms Self-Regulate

Author

Listed:
  • Pierre Fleckinger

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Matthieu Glachant

    (CERNA i3 - Centre d'économie industrielle i3 - Mines Paris - PSL (École nationale supérieure des mines de Paris) - PSL - Université Paris sciences et lettres - I3 - Institut interdisciplinaire de l’innovation - CNRS - Centre National de la Recherche Scientifique)

Abstract

Does self-regulation improve social welfare? We develop a policy game featuring a regulator and a firm that can unilaterally commit to better environmental or social behavior in order to preempt future public policy. We show that the answer depends on the set of policy instruments available to the regulator. Self-regulation improves welfare if the regulator can only use mandatory regulation: it reduces welfare when the regulator opts for a voluntary agreement. This suggests that self-regulation and voluntary agreements are not good complements from a welfare point of view. We derive the policy implications, and extend the basic model in several dimensions.

Suggested Citation

  • Pierre Fleckinger & Matthieu Glachant, 2011. "Negotiating a Voluntary Agreement When Firms Self-Regulate," Post-Print hal-00529632, HAL.
    • Handle: RePEc:hal:journl:hal-00529632
    DOI: 10.1016/j.jeem.2011.03.002
    Note: View the original document on HAL open archive server: https://minesparis-psl.hal.science/hal-00529632
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    References listed on IDEAS

    as
    1. Stefan Lutz & Thomas P. Lyon & John W. Maxwell, 2000. "Quality Leadership when Regulatory Standards are Forthcoming," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 331-348, September.
    2. Glachant, Matthieu, 2007. "Non-binding voluntary agreements," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 32-48, July.
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    13. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
    14. Thomas P. Lyon & John W. Maxwell, 2008. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 240-260, Summer.
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    Cited by:

    1. Contreras, Gabriela & Bos, Jaap W.B. & Kleimeier, Stefanie, 2019. "Self-regulation in sustainable finance: The adoption of the Equator Principles," World Development, Elsevier, vol. 122(C), pages 306-324.
    2. Ambec, Stefan & De Donder, Philippe, 2022. "Environmental policy with green consumerism," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    3. Arimura, Toshi H. & Kaneko, Shinji & Managi, Shunsuke & Shinkuma, Takayoshi & Yamamoto, Masashi & Yoshida, Yuichiro, 2019. "Political economy of voluntary approaches: A lesson from environmental policies in Japan," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 41-53.
    4. Kathleen Segerson, 2013. "Voluntary Approaches to Environmental Protection and Resource Management," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 161-180, June.
    5. Buckley, Ralf, 2013. "Social-benefit certification as a game," Tourism Management, Elsevier, vol. 37(C), pages 203-209.

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