Public Voluntary Programs Reconsidered
John W. Maxwell
Indiana University - Kelley School of Business; Richard Ivey School of Business
Thomas P. Lyon
University of Michigan - Stephen M. Ross School of Business
"Public voluntary programs" (PVPs) involve government offers of positive publicity and technical assistance to firms that reach certain environmental goals. A growing body of empirical evidence suggests these programs often have little impact on the behavior of their participants. A natural policy conclusion would be to eliminate these programs, but this paper offers several reasons not to jump to such a conclusion. We first present a political-economic framework in which PVPs are viewed as modest subsidies used when political opposition makes stronger environmental regulation infeasible. We then explore the design of PVPs in detail, showing how PVPs can potentially enhance the diffusion of cost-effective techniques for pollution abatement, so long as the information involved is not competitively sensitive. Identifying the effects of PVPs econometrically is difficult because information is likely to diffuse to non-participants. Thus, after the early phases of even a successful PVP, it may well be impossible to detect a difference in performance between participants and non-participants.
Number of Pages in PDF File: 24
Keywords: Public Voluntary Programs, Regulatory Threat, Information Diffusion
JEL Classification: L2, L5, H2working papers series
Date posted: March 7, 2007
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