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Green Clubs

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  • Klaas van 't Veld
  • Matthew J. Kotchen

Abstract

This paper treats programs in which firms voluntarily agree to meet environmental standards as "green clubs": clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors--governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can, then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot, then this reinforces the government's preference for delegating sponsorship.

Suggested Citation

  • Klaas van 't Veld & Matthew J. Kotchen, 2010. "Green Clubs," NBER Working Papers 16627, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16627
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Corradini, Massimiliano & Costantini, Valeria & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Unveiling the dynamic relation between R&D and emission abatement," Ecological Economics, Elsevier, vol. 102(C), pages 48-59.
    2. Cecere, Grazia & Mancinelli, Susanna & Mazzanti, Massimiliano, 2014. "Waste prevention and social preferences: the role of intrinsic and extrinsic motivations," Ecological Economics, Elsevier, vol. 107(C), pages 163-176.
    3. Heindl, Peter & Kanschik, Philipp, 2016. "Ecological sufficiency, individual liberties, and distributive justice: Implications for policy making," Ecological Economics, Elsevier, vol. 126(C), pages 42-50.
    4. repec:spr:climat:v:144:y:2017:i:1:d:10.1007_s10584-015-1517-9 is not listed on IDEAS
    5. Li, Yuanhao & van 't Veld, Klaas, 2015. "Green, greener, greenest: Eco-label gradation and competition," Journal of Environmental Economics and Management, Elsevier, vol. 72(C), pages 164-176.
    6. Massimiliano Corradini & Valeria Costantini & Massimiliano Mazzanti & Susanna Mancinelli, 2014. "Linking innovation investment and environmental performance: an impure dynamic public good model," SEEDS Working Papers 0814, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Apr 2014.
    7. Todd Sandler, 2013. "Buchanan clubs," Constitutional Political Economy, Springer, vol. 24(4), pages 265-284, December.
    8. Massimiliano Mazzanti & Valeria Costantini & Susanna Mancinelli & Massimilano Corradini, 2011. "Environmental and Innovation Performance in a Dynamic Impure Public Good Framework," Working Papers 201117, University of Ferrara, Department of Economics.
    9. repec:kap:regeco:v:52:y:2017:i:3:d:10.1007_s11149-017-9339-5 is not listed on IDEAS
    10. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.
    11. Sexton, Steven E. & Sexton, Alison L., 2014. "Conspicuous conservation: The Prius halo and willingness to pay for environmental bona fides," Journal of Environmental Economics and Management, Elsevier, vol. 67(3), pages 303-317.
    12. repec:eee:touman:v:37:y:2013:i:c:p:203-209 is not listed on IDEAS
    13. Massimiliano Corradini & Valeria Costantini & Susanna Mancinelli & Massimiliano Mazzanti, 2015. "Interacting innovation investments and environmental performances: a dynamic impure public good model," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 17(1), pages 109-129, January.

    More about this item

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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