Self-regulation and social welfare: The political economy of corporate environmentalism

Arbeitspapier

We extend the economic theory of regulation to allow for strategic self-regulation that preempts political action. When political "entry" is costly for consumer, firms can deter it through voluntary restraints. Unlike standard entry models, deterrence is achieved by over-investing to raise the rival's welfare in the event of entry. Empirical evidence on releases of toxic chemicals shows that an increased threat of regulation (as proxied by increased membership in conservation groups) indeed induces firms to reduce toxic releases. We establish conditions under which self-regulation, if it occurs, is a Pareto improvement once costs of influencing policy are included.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Nota di Lavoro ; No. 55.1998

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Energy, Environmental, Health, and Safety Law ; Economics of Regulation ; Renewable Resources and Conservation: Government Policy
• Subject: Regulation ; Environment ; Self-regulation ; Political Economy ; Umweltmanagement ; Selbstverpflichtung ; Regulierungstheorie ; Wohlfahrtstheorie ; Neue politische Ökonomie ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Maxwell, John W. ; Lyon, Thomas Peyton ; Hackett, Steven Curtis
• Event: Veröffentlichung
• (who): Fondazione Eni Enrico Mattei (FEEM)
• (where): Milano
• (when): 1998

Further information

• Handle: http://hdl.handle.net/10419/154913
• Last update: 10.03.2025, 11:44 AM CET