Non-Binding Voluntary Agreements

Posted: 20 Mar 2008

Abstract

In reality, most voluntary agreements (VAs) with polluters are not enforceable in the sense that no legal tools are available to enforce firms' commitments. We examine whether such VAs are able to achieve an efficient level of environmental protection when they are obtained under the legislative threat of a pollution quota. We show that they can improve social welfare relative to legislative intervention when lobbying congress is very effective and when the polluter and the regulator do not discount future costs and benefits heavily. These findings suggest that VAs should be used selectively, taking into account sector characteristics and the degree of influence of lobbying on congress.

Keywords: Environmental policy, Voluntary agreements, Bargaining, Lobbying, Enforcement

JEL Classification: D72, Q28

Suggested Citation

Glachant, Matthieu, Non-Binding Voluntary Agreements. Journal of Environmental Economics and Management, Vol. 54, 2007, Available at SSRN: https://ssrn.com/abstract=1111554

Matthieu Glachant (Contact Author)

MINES ParisTech ( email )

60, boulevard Saint Michel
75272 Paris cedex 06, 75006
France
+33 1 40 51 9229 (Phone)

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