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Firms' Choice of Regulation Instruments to Reduce Pollution: A Tansaction Cost Approach

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  • Delmas, Magali

    (U of California, Santa Barbara and Stanford U)

  • Marcus, Alfred

    (U of Minnesota)

Abstract

This paper extends transaction costs economics to analyze relationships between firms and regulatory agencies. It compares the economic efficiency of firm-agency governance structures for dealing with pollution reduction. The transaction costs of three ideal type governance structures are analyzed: command and control regulation, market based mechanisms, and negotiated agreements. We propose that the choice of governance structure will depend on the strategies firms are pursuing given their transaction attributes and market opportunities.

Suggested Citation

  • Delmas, Magali & Marcus, Alfred, 2003. "Firms' Choice of Regulation Instruments to Reduce Pollution: A Tansaction Cost Approach," Research Papers 1806, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:1806
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    References listed on IDEAS

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