IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v23y2023i4p1045-1071n15.html
   My bibliography  Save this article

Relational Voluntary Environmental Agreements with Unverifiable Emissions

Author

Listed:
  • Cesi Berardino

    (Department of Political Sciences, La Sapienza University of Rome, p.zza Aldo Moro, 5, Rome, Italy)

  • D’Amato Alessio

    (Department of Economics and Finance, Tor Vergata University of Rome and SEEDS, Rome, Italy)

Abstract

Environmental regulation and pollution control may clash against the presence of unverifiable tasks, like source-specific emissions. To tackle this issue, we reshape a voluntary agreement instrument, already available in the existing literature, from a dynamic perspective by means of a relational contracting approach. We define a Relational Voluntary Environmental Agreement (RVEA) in an N firms symmetric context, and show that even if emissions are not contractible across firms, and therefore enforcement cannot be delegated to a third party, if firms are sufficiently patient, a self-enforcing RVEA induces the achievement of the environmental objective. Finally, our welfare analysis reveals a notable result: our RVEA can imply less free riding and be welfare-improving with respect to a Voluntary Environmental Agreement enforced by a third party (along the lines of McEvoy, D. M., and J. K. Stranlund. 2010. “Costly Enforcement of Voluntary Environmental Agreements.” Environmental and Resource Economics 47: 45–63).

Suggested Citation

  • Cesi Berardino & D’Amato Alessio, 2023. "Relational Voluntary Environmental Agreements with Unverifiable Emissions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 23(4), pages 1045-1071, October.
    • Handle: RePEc:bpj:bejeap:v:23:y:2023:i:4:p:1045-1071:n:15
    DOI: 10.1515/bejeap-2022-0464
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2022-0464
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2022-0464?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    relational contracts; environmental policy; unverifiability; Voluntary Environmental Agreement;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    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:bpj:bejeap:v:23:y:2023:i:4:p:1045-1071:n:15. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.