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Regulation, reputation, and environmental risk

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  • Banerjee, Prasenjit
  • Shogren, Jason F.

Abstract

This paper examines how preferences for social reputation affect the design of monetary incentives in an efficient mechanism for environmental risk. Our results are a high reputation firm receives less than optimal transfer; the low reputation firm sacrifices information rent.

Suggested Citation

  • Banerjee, Prasenjit & Shogren, Jason F., 2010. "Regulation, reputation, and environmental risk," Economics Letters, Elsevier, vol. 106(1), pages 45-47, January.
    • Handle: RePEc:eee:ecolet:v:106:y:2010:i:1:p:45-47
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    References listed on IDEAS

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    1. Smith, Adam, 1759. "The Theory of Moral Sentiments," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1759.
    2. Laffont, Jean-Jacques, 1995. "Regulation, moral hazard and insurance of environmental risks," Journal of Public Economics, Elsevier, vol. 58(3), pages 319-336, November.
    3. Jean Tirole & Roland Bénabou, 2006. "Incentives and Prosocial Behavior," American Economic Review, American Economic Association, vol. 96(5), pages 1652-1678, December.
    4. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
    5. Baliga, Sandeep & Maskin, Eric, 2003. "Mechanism design for the environment," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 7, pages 305-324, Elsevier.
    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. Smith, Rodney B. W. & Shogren, Jason F., 2002. "Voluntary Incentive Design for Endangered Species Protection," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 169-187, March.
    8. Bruno S. Frey & Reto Jegen, 2001. "Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
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    Cited by:

    1. Li, Wanfu & Jiang, Mengmeng & Zhang, Xuejiao & Wang, Yu & Qu, Xiaoyi, 2023. "Does foreign experience of top management affect corporate environmental responsibility? Evidence from China," Economic Modelling, Elsevier, vol. 122(C).
    2. Tan, Weijie & Shen, Minghao & Pang, Yubiao & Liu, Yiqian, 2024. "Bank agglomeration and corporate environmental responsibility performance: Evidence from Chinese bank branch data," International Review of Financial Analysis, Elsevier, vol. 91(C).
    3. Fukuda, Katsufumi & Ouchida, Yasunori, 2020. "Corporate social responsibility (CSR) and the environment: Does CSR increase emissions?," Energy Economics, Elsevier, vol. 92(C).
    4. Banerjee, Prasenjit & Shogren, Jason F., 2012. "Material interests, moral reputation, and crowding out species protection on private land," Journal of Environmental Economics and Management, Elsevier, vol. 63(1), pages 137-149.
    5. Yildiz, Özgür, 2014. "Lehren aus der Verhaltensökonomik für die Gestaltung umweltpolitischer Maßnahmen [Lessons from behavioral economics for the design of environmental policy measures]," MPRA Paper 59360, University Library of Munich, Germany.
    6. Hsu, Bo-Xiang & Chen, Yi-Min, 2023. "The relationship between corporate social responsibility, external orientation, and environmental performance," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    7. Rupayan Pal & Preksha Jain & Prasenjit Banerjee, 2022. "The Environment and corruption: Monetary vs. Non-monetary Incentives and the first best," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2022-011, Indira Gandhi Institute of Development Research, Mumbai, India.
    8. Rupayan Pal & Prasenjit Banerjee & Pratik Thakkar & A. M. Tanvir Hussain, 2022. "Green firm, brown environment," Manchester School, University of Manchester, vol. 90(2), pages 107-121, March.
    9. Qin, Botao & Shogren, Jason F., 2015. "Social norms, regulation, and environmental risk," Economics Letters, Elsevier, vol. 129(C), pages 22-24.
    10. Rupayan Pal & A.M. Tanvir Hussain & Prasenjit Banerjee, 2018. "Green firm, brown production," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2018-011, Indira Gandhi Institute of Development Research, Mumbai, India.

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