Voluntary Agreements with Industries: Participation Incentives with Industry-Wide Targets

Na Dawson () and Kathleen Segerson ()

Land Economics, 2008, vol. 84, issue 1, 97-114

Abstract: We consider a policy environment in which an entire industry is faced with possible imposition of an emissions tax if environmental goals are not met voluntarily. We develop a multiple-firm model of pollution abatement in this context. Using the concept of a self-enforcing equilibrium, we examine the free-riding incentive of individual firms and its impact on the viability of the voluntary approach. We find that, despite the free-riding problem, a sub-group of firms have an incentive to participate in the VA. The VA is strictly preferred by the industry as a whole, although it is not cost-minimizing.

JEL-codes: Q53 Q58 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (48)

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Working Paper: Voluntary Agreements with Industries: Participation Incentives with Industry-wide Targets (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:landec:v:84:y:2008:i:1:p:97-114

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