Why regulators adopt voluntary programs: a theoretical analysis of voluntary pollutant reduction programs

Takuro Miyamoto

    Research output: Contribution to journalArticle

    2 Citations (Scopus)

    Abstract

    To explain why regulators continue to implement voluntary emission reduction programs (VP), this study presents a model with multiple polluting firms, a trade association, a regulator, and a legislator who sets a mandatory standard and is politically influenced by the trade association, a representative of the polluting firms. We show that the regulator can implement a voluntary program, which generates less social cost and more aggregate abatement than a mandatory standard. We also find that assigning the greatest importance to the abatement rates of individual firms generates the highest level of social welfare if the damage due to individual firms’ emissions does not depend on other firms’ emissions. However, the importance of the participation rate will increase relatively to the abatement rate as the damage due to individual firms’ emissions becomes more sensitive to other firms’ emissions.

    Original languageEnglish
    Pages (from-to)1-25
    Number of pages25
    JournalEnvironmental Economics and Policy Studies
    DOIs
    Publication statusAccepted/In press - 2015 Nov 18

    Keywords

    • Cooperation under threat
    • Environmental policy
    • free riding
    • Lobbying
    • Voluntary programs

    ASJC Scopus subject areas

    • Management, Monitoring, Policy and Law
    • Economics and Econometrics

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