'Green' Firms Bearing Gifts

Abstract:     
Corporate environmentalism - environmental improvement not required by law - has become increasingly prominent in recent years. The new emphasis on voluntarism makes little sense within conventional paradigms for understanding environmental policy. Because pollution abatement is costly, firms are expected to avoid it whenever possible, and governments must impose penalties severe enough to compel compliance. Even from the public choice perspective, voluntary programs are anomalous: While some firms or industries may prefer to become regulated to protect themselves against competition, the strategy works by invoking the coercive power of the state to raise rivals' costs, not by voluntarily raising one's own costs. A sudden shift to a world of cooperation and voluntary environmental protection seems strange, if not downright suspicious.

Keywords: Corporate environmentalism, environmental policy, environmental regulations, regulation, pollution, clean air, preempting regulation, voluntary environmental protection

JEL Classifications: Q2, Q3, L51

Accepted Paper Series