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Voluntary Environmental Agreements when Regulatory Capacity Is Weak

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  • Blackman, Allen

    (Resources for the Future)

  • Lyon, Thomas P.
  • Sisto, Nicholas

Abstract

Voluntary agreements (VAs) negotiated between environmental regulators and industry are increasingly popular. However, little is known about whether they are likely to be effective in developing and transition countries, where local and federal environmental regulatory capacity is typically weak. We develop a dynamic theoretical model to examine the effect of VAs on investment in regulatory infrastructure and pollution abatement in such countries. We find that under certain conditions, VAs can improve welfare by generating more private-sector investment in pollution control and more public-sector investment in regulatory capacity than the status quo.

Suggested Citation

  • Blackman, Allen & Lyon, Thomas P. & Sisto, Nicholas, 2006. "Voluntary Environmental Agreements when Regulatory Capacity Is Weak," RFF Working Paper Series dp-06-30, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-06-30
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    File URL: http://www.rff.org/RFF/documents/RFF-DP-06-30.pdf
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    References listed on IDEAS

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    1. Baron, David P., 1989. "Design of regulatory mechanisms and institutions," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 24, pages 1347-1447, Elsevier.
    2. Matthieu Glachant, 2003. "Voluntary Agreements under Endogenous Legislative Threats," Working Papers 2003.36, Fondazione Eni Enrico Mattei.
    3. Segerson, Kathleen & Miceli, Thomas J., 1998. "Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 109-130, September.
    4. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, April.
    5. 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.
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    Cited by:

    1. Thomas P. Lyon & John W. Maxwell, 2008. "Corporate Social Responsibility and the Environment: A Theoretical Perspective," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 2(2), pages 240-260, Summer.
    2. Bryden, Anna & Petticrew, Mark & Mays, Nicholas & Eastmure, Elizabeth & Knai, Cecile, 2013. "Voluntary agreements between government and business—A scoping review of the literature with specific reference to the Public Health Responsibility Deal," Health Policy, Elsevier, vol. 110(2), pages 186-197.
    3. Zixiao Liu & Zengming Wu & Mengnan Zhu, 2022. "Research on the Green Effect of Environmental Policies—From the Perspective of Policy Mix," Sustainability, MDPI, vol. 14(23), pages 1-15, November.
    4. Kalim Shah & Jorge Rivera, 2008. "Export processing zones and corporate environmental performance in emerging economies: The case of the oil, gas, and chemical sectors of Trinidad and Tobago," Policy Sciences, Springer;Society of Policy Sciences, vol. 41(2), pages 181-182, June.
    5. Allen Blackman & Eduardo Uribe & Bart Hoof & Thomas Lyon, 2013. "Voluntary environmental agreements in developing countries: the Colombian experience," Policy Sciences, Springer;Society of Policy Sciences, vol. 46(4), pages 335-385, December.
    6. Brice Foulon & Sylvain Marsat, 2023. "Does environmental footprint influence the resilience of firms facing environmental penalties?," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 6154-6168, December.

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    More about this item

    Keywords

    voluntary environmental regulation; developing country;

    JEL classification:

    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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