Tailored Regulation: Will Voluntary Site-Specific Environmental Performance Standards Improve Welfare?

Allen Blackman () and James W. Boyd ()

Southern Economic Journal, 2002, vol. 69, issue 2, pages 309-326

Abstract: Increasingly popular tailored regulation (TR) initiatives like the Environmental Protection Agency's Project XL allow industrial facilities to voluntarily substitute site-specific environmental performance standards for inefficient command-and-control regulations. TR can significantly reduce participants' costs of complying with environmental regulations, but in doing so it can also give these participants a competitive advantage. Here we develop an analytical model to show that TR can have adverse welfare effects when it enables relatively inefficient firms in oligopolistic markets to “steal” market share from more efficient firms, and we characterize the regulatory policies that give rise to such outcomes. We also show that regulators' efforts to diffuse the benefits of site-specific agreements among nonparticipating firms dampen incentives to participate in TR.

Date: 2002

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:sej:ancoec:v:69:2:y:2002:p:309-326

Access Statistics for this article

Southern Economic Journal is edited by Laura Razzolini

More articles in Southern Economic Journal from Southern Economic Association
Contact information at EDIRC.
Series data maintained by Laura Razzolini ().