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Honor and stigma in mechanisms for environmental protection

Author

Listed:
  • Prasenjit Banerjee

    (University of Manchester)

  • Rupayan Pal

    (Indira Gandhi Institute of Development Research)

  • Jason F. Shogren

    (University of Wyoming)

Abstract

Honor and stigma play a role in environmental protection. Environmental honors are bestowed on people and firms who go out of their way to do right by the environment. Similarly, environmental stigma is put on people or firms who are publicly taken to task for their poor environmental record. We design a voluntary incentive mechanism by incorporating honor and stigma to induce heterogeneous firms to protect the environment at less cost. We encounter a motivational costs incurred by the green firm-it loses its leadership rents. Our result suggests (i) an additional social reward is needed for a green firm; and (ii) the brown firm may sacrifice information rent.

Suggested Citation

  • Prasenjit Banerjee & Rupayan Pal & Jason F. Shogren, 2016. "Honor and stigma in mechanisms for environmental protection," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2016-017, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2016-017
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2016-017.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Mechanism; reputation; environmental risk; honor; stigma; social norm;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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