Reputation and the Control of Pollution

Arthur Caplan

No 2002-24, Working Papers from Utah State University, Department of Economics

Abstract: This paper investigates the effectiveness of reputation in inducing a polluting firm to selfregulate its emissions when consumers have imperfect information. In particular, we ask to what extent must consumers reward and punish the firm before it chooses self-regulation as its dominant strategy? We find that if payoffs in the stage game are such that both the consumer and the polluting firm have beliefs that are consistent with each others’ behaviors, then the firm has a positive probability of playing clean in each period of a finite game. Further, we find that a weak reward/punishment scheme may have an adverse effect on the environment, and that there are both environmental and welfare gains associated with strengthening the scheme.

Keywords: reputation; sequential equilibrium; self-regulation; pollution (search for similar items in EconPapers)
JEL-codes: D21 D62 L51 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2002-12
References: Add references at CitEc
Citations:

Downloads: (external link)
https://repec.bus.usu.edu/RePEc/usu/pdf/ERI2002-24.pdf First version, 2002 (application/pdf)

Related works:
Journal Article: Reputation and the control of pollution (2003)
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: https://EconPapers.repec.org/RePEc:usu:wpaper:2002-24

Access Statistics for this paper

More papers in Working Papers from Utah State University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by John Gilbert ().