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A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO

Author

Listed:
  • Anthony Heyes

    (University of Ottawa
    University of Sussex)

  • Andreas Marcel Oestreich

    (Brock University)

Abstract

We develop a model in which social pressure on a firm to behave well is jointly produced by a state regulator (EPA) and an NGO. The EPA and NGO differ in how they trade-off business versus environmental interests and also have access to different instruments in pursuit of their objectives. In particular, while the EPA will typically have the tools for detecting misbehaviour, the NGO can influence the intensity of social hostility directed towards those found to have misbehaved. EPA and NGO efforts may be strategic complements or substitutes, depending upon circumstances. We present a taxonomy of outcomes in the game between EPA and NGO in the spirit of Fudenberg and Tiroles’s (Am Econ Rev Pap Proc 74(2):361–366, 1984) classic taxonomy of business strategies. We also consider strategic delegation from NGO supporters to an NGO that has tastes over environmental and business interests different to their own.

Suggested Citation

  • Anthony Heyes & Andreas Marcel Oestreich, 2018. "A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO," Journal of Regulatory Economics, Springer, vol. 54(3), pages 219-243, December.
    • Handle: RePEc:kap:regeco:v:54:y:2018:i:3:d:10.1007_s11149-018-9370-1
    DOI: 10.1007/s11149-018-9370-1
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    Cited by:

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    2. 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.
    3. Dorothée Brécard, 2023. "How Corporate–NGO Partnerships Affect Eco-Label Adoption and Diffusion," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 86(1), pages 233-261, October.

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    More about this item

    Keywords

    Environmental regulation; Private politics; Strategic delegation; NGOs; Social license;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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