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Environmental Regulation through Voluntary Agreements

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  • Hansen, Lars Gårn

Abstract

Voluntary agreements with polluting industries are becoming a popular alternative to traditional environmental regulation. One reason may be that voluntary agreements can reduce compliance costs of polluting industries. In this paper we develop a family of simple policy formulation and implementation models enabling us to formally characterize the policy environments that make voluntary agreements possible. The main message of this paper is one of caution. Voluntary agreements that increase compliance costs and reduce social welfare can not be ruled out. The analyses also suggests that giving the legislative branch of government an effective power of veto reduces (but does not eliminate) the possibility of welfare reducing voluntary agreements.

Suggested Citation

  • Hansen, Lars Gårn, 1997. "Environmental Regulation through Voluntary Agreements," MPRA Paper 47537, University Library of Munich, Germany, revised 1999.
    • Handle: RePEc:pra:mprapa:47537
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    File URL: https://mpra.ub.uni-muenchen.de/47537/1/NDL1997-023.pdf
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    References listed on IDEAS

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    5. Matthieu Glachant, 1994. "The setting of voluntary agreements between industry and government: Bargaining and efficiency," Business Strategy and the Environment, Wiley Blackwell, vol. 3(2), pages 43-49.
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    Citations

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    Cited by:

    1. Kjell Sunnevåg, 2000. "Voluntary Agreements and the Incentives for Innovation," Environment and Planning C, , vol. 18(5), pages 555-573, October.
    2. Maxwell, John W., 1998. "Designing voluntary environmental agreements in Europe: Some lessons from the U.S. EPA's 33/50 program," ZEI Working Papers B 07-1998, University of Bonn, ZEI - Center for European Integration Studies.
    3. Thomas P. Lyon & John W. Maxwell, 1999. "Corporate environmental strategies as tools to influence regulation," Business Strategy and the Environment, Wiley Blackwell, vol. 8(3), pages 189-196, May.
    4. Madhu Khanna, 2001. "Non‐Mandatory Approaches to Environmental Protection," Journal of Economic Surveys, Wiley Blackwell, vol. 15(3), pages 291-324, July.
    5. Matthieu Glachant, 2003. "Voluntary Agreements under Endogenous Legislative Threats," Working Papers 2003.36, Fondazione Eni Enrico Mattei.
    6. Peter Bôrkey & Matthieu Glachant, 1998. "Les engagements volontaires de l'industrie : un mode original de réglementation environnementale," Revue d'Économie Industrielle, Programme National Persée, vol. 83(1), pages 213-224.
    7. Iulie Aslaksen & Terje Synnestvedt, 2003. "Corporate environmental protection under uncertainty," Discussion Papers 355, Statistics Norway, Research Department.
    8. Rinaldo Brau & C. Carraro, 2004. "The economic analysis of voluntary approaches to environmental protection. A survey," Working Paper CRENoS 200420, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    9. Gamper-Rabindran, Shanti, 2006. "Did the EPA's voluntary industrial toxics program reduce emissions? A GIS analysis of distributional impacts and by-media analysis of substitution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 391-410, July.
    10. James Cunningham & J Peter Clinch, 2005. "Innovation and Environmental Voluntary Approaches," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 48(3), pages 373-392.
    11. Daniel Fernández‐Kranz & Juan Santaló, 2010. "When Necessity Becomes a Virtue: The Effect of Product Market Competition on Corporate Social Responsibility," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 453-487, June.
    12. Ryo Ishida & Takuro Miyamoto, 2014. "Does an Optimal Voluntary Approach Flexibly and Efficiently Control Emissions from Heterogeneous Firms?," Discussion papers ron257, Policy Research Institute, Ministry of Finance Japan.
    13. Khanna, Madhu & Damon, Lisa A., 1999. "EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms," Journal of Environmental Economics and Management, Elsevier, vol. 37(1), pages 1-25, January.
    14. Anna Alberini & Kathleen Segerson, 2002. "Assessing Voluntary Programs to Improve Environmental Quality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(1), pages 157-184, June.
    15. Thomas P. Lyon & John W. Maxwell, 2004. "Mandatory and Voluntary Approaches to Mitigating Climate Change," Working Papers 2004-28, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    16. Lyon, Thomas P. & Maxwell, John W., 2003. "Self-regulation, taxation and public voluntary environmental agreements," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1453-1486, August.
    17. R. Bracke & J. Albrecht & M. De Clercq, 2006. "The use of negotiated environmental agreements: from gentlemen’s agreements to binding contracts," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/415, Ghent University, Faculty of Economics and Business Administration.
    18. Hansen, Lars Gårn, 2005. "Aspects of the political economy of environmental voluntary agreements - a meta study," MPRA Paper 49200, University Library of Munich, Germany.
    19. Manzini, Paola & Mariotti, Marco, 2003. "A bargaining model of voluntary environmental agreements," Journal of Public Economics, Elsevier, vol. 87(12), pages 2725-2736, December.
    20. Takuro Miyamoto, 2016. "Why regulators adopt voluntary programs: a theoretical analysis of voluntary pollutant reduction programs," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 18(4), pages 599-623, October.
    21. Bjorner, Thomas Bue & Jensen, Henrik Holm, 2002. "Energy taxes, voluntary agreements and investment subsidies--a micro-panel analysis of the effect on Danish industrial companies' energy demand," Resource and Energy Economics, Elsevier, vol. 24(3), pages 229-249, June.
    22. Grepperud, Sverre, 2002. "Voluntary environmental agreements: bargaining over more than emissions," European Journal of Political Economy, Elsevier, vol. 18(3), pages 545-559, September.
    23. Adrienne Héritier & Sandra Eckert, 2007. "New Modes of Governance in the Shadow of Hierarchy: Self-Regulation by Industry in Europe," EUI-RSCAS Working Papers 20, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    24. Bruce Paton, 2000. "Voluntary environmental initiatives and sustainable industry," Business Strategy and the Environment, Wiley Blackwell, vol. 9(5), pages 328-338, September.
    25. repec:bla:jindec:v:48:y:2000:i:3:p:331-48 is not listed on IDEAS

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    More about this item

    Keywords

    Voluntary Agreements;

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • H0 - Public Economics - - General
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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