Self-Regulation and Social Welfare: The Political Economy of Corporate Environmentalism
John Maxwell,
Thomas Lyon () and
Steven C Hackett
Journal of Law and Economics, 2000, vol. 43, issue 2, 583-617
Abstract:
We extend the economic theory of regulation to allow for strategic self-regulation that preempts political action. When political "entry" is costly for consumers, firms can deter it through voluntary restraints. Unlike standard entry models, deterrence is achieved by overinvesting 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. Copyright 2000 by the University of Chicago.
Date: 2000
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (304)
Downloads: (external link)
http://dx.doi.org/10.1086/467466 (application/pdf)
Access to the online full text or PDF requires a subscription.
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: https://EconPapers.repec.org/RePEc:ucp:jlawec:v:43:y:2000:i:2:p:583-617
Access Statistics for this article
More articles in Journal of Law and Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().