IDEAS home Printed from https://ideas.repec.org/p/ind/igiwpp/2016-017.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: http://www.igidr.ac.in/pdf/publication/WP-2016-017.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Assar Lindbeck & Sten Nyberg & Jörgen W. Weibull, 1999. "Social Norms and Economic Incentives in the Welfare State," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 1-35.
    2. Jan Potters & Martin Sefton & Lise Vesterlund, 2007. "Leading-by-example and signaling in voluntary contribution games: an experimental study," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(1), pages 169-182, October.
    3. Laure Kuhfuss & Raphaële Préget & Sophie Thoyer & Nick Hanley & Philippe Le Coent & Mathieu Désolé, 2016. "Nudges, Social Norms, and Permanence in Agri-environmental Schemes," Land Economics, University of Wisconsin Press, vol. 92(4), pages 641-655.
    4. Furuya, Kaku, 2002. "A socio-economic model of stigma and related social problems," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 281-290, July.
    5. Posner, Richard A. & Rasmusen, Eric B., 1999. "Creating and enforcing norms, with special reference to sanctions1," International Review of Law and Economics, Elsevier, vol. 19(3), pages 369-382, September.
    6. Bowles, Samuel & Hwang, Sung-Ha, 2008. "Social preferences and public economics: Mechanism design when social preferences depend on incentives," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1811-1820, August.
    7. Margarita Genius & Phoebe Koundouri & Céline Nauges & Vangelis Tzouvelekas, 2014. "Information Transmission in Irrigation Technology Adoption and Diffusion: Social Learning, Extension Services, and Spatial Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 328-344.
    8. Shogren, Jason F., 1987. "Negative conjectures and increased public good provision," Economics Letters, Elsevier, vol. 23(2), pages 181-184.
    9. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    10. Rasmusen, Eric, 1996. "Stigma and Self-Fulfilling Expectations of Criminality," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 519-543, October.
    11. Posner, R.A. & Rasmusen, E., 1998. "Creating and Enforcing Norms, with Special Reference to Sanctions," Papers 98-005, Indiana - Center for Econometric Model Research.
    12. Besley, Timothy & Ghatak, Maitreesh, 2007. "Retailing public goods: The economics of corporate social responsibility," Journal of Public Economics, Elsevier, vol. 91(9), pages 1645-1663, September.
    13. Gwyn Bevan & Deborah Wilson, 2013. "Does ‘naming and shaming’ work for schools and hospitals? Lessons from natural experiments following devolution in England and Wales," Public Money & Management, Taylor & Francis Journals, vol. 33(4), pages 245-252, July.
    14. Hermalin, Benjamin E, 1998. "Toward an Economic Theory of Leadership: Leading by Example," American Economic Review, American Economic Association, vol. 88(5), pages 1188-1206, December.
    15. George A. Akerlof, 1980. "A Theory of Social Custom, of which Unemployment may be One Consequence," The Quarterly Journal of Economics, Oxford University Press, vol. 94(4), pages 749-775.
    16. Alessandro Tavoni & Astrid Dannenberg & Giorgos Kallis & Andreas L�schel, 2011. "Inequality, communication and the avoidance of disastrous climate change," GRI Working Papers 34, Grantham Research Institute on Climate Change and the Environment.
    17. S. Bowles & S. Polania-Reyes., 2013. "Economic Incentives and Social Preferences: Substitutes or Complements?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
    18. Paul Fischer & Steven Huddart, 2008. "Optimal Contracting with Endogenous Social Norms," American Economic Review, American Economic Association, vol. 98(4), pages 1459-1475, September.
    19. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1082-1095, October.
    20. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
    21. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9), pages 1082-1095.
    22. John D. McClelland & John K. Horowitz, 1999. "The Costs of Water Pollution Regulation in the Pulp and Paper Industry," Land Economics, University of Wisconsin Press, vol. 75(2), pages 220-232.
    23. Qin, Botao & Shogren, Jason F., 2015. "Social norms, regulation, and environmental risk," Economics Letters, Elsevier, vol. 129(C), pages 22-24.
    24. Knack, Stephen & Kropf, Martha, 2003. "Viewers like you: community norms and contributions to public broadcasting," MPRA Paper 27248, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Mechanism; reputation; environmental risk; honor; stigma; social norm;

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ind:igiwpp:2016-017. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamprasad M. Pujar). General contact details of provider: http://edirc.repec.org/data/igidrin.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.