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Regulators and Environmental Groups: Substitutes or Complements?

Author

Listed:
  • Espinola-Arredondo, Ana

    (Washington State University)

  • Stathopoulou, Eleni

    (University of Leicester)

  • Munoz, Felix

    (Washington State University)

Abstract

This paper examines green alliances between environmental groups and polluting firms, which have become more common in the last decades, and analyzes how they a¤ect policy design. We first show that the activities of regulators and environmental groups are strategic substitutes, giving rise to free-riding incentives on both agents. Nonetheless, we find that the presence of the environmental group alone yields no welfare bene?t, as firms have no incentives to alter their abatement decisions when they do not face regulation. Therefore, the introduction of environmental groups yields a welfare gain when firms are already subject to regulation, suggesting that the former cannot completely replace environmental policy.

Suggested Citation

  • Espinola-Arredondo, Ana & Stathopoulou, Eleni & Munoz, Felix, 2019. "Regulators and Environmental Groups: Substitutes or Complements?," Working Papers 2019-1, School of Economic Sciences, Washington State University.
    • Handle: RePEc:ris:wsuwpa:2019_001
    Note: http://ses.wsu.edu/wp-content/uploads/2019/03/WP2019-1.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Abatement; Emission fees; R&D disruptive e¤ects; Equilibrium pro?les; Spillovers;
    All these keywords.

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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