Self-Regulation, Taxation, and Public Voluntary Environmental Agreements

IU Kelley, School Dept. of Bus. Econ. & Public Policy Working Paper No. 00-12

60 Pages Posted: 21 Dec 2000

See all articles by Thomas P. Lyon

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business

John W. Maxwell

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy; Indiana University, Department of Economics; Richard Ivey School of Business

Date Written: November 1, 2000

Abstract

An increasingly popular instrument for solving environmental problems is the "public voluntary agreement (VA)", in which government offers technical assistance and positive publicity to firms that reach certain environmental goals. Prior papers treat such agreements as a superior, low-cost instrument that can be used to preempt a threat of traditional, inefficient regulation. We present a more general model in which public VAs may instead be weak tools used when political opposition makes environmental taxes infeasible. We explore the conditions under which taxes, public VAs, and unilateral industry actions are to be expected, and the welfare implications of the various instruments. Notably, we also show that welfare may be reduced by the introduction of public VAs.

Keywords: self-regulation, public voluntary agreements, preemption

JEL Classification: D72, K32, L51, Q28

Suggested Citation

Lyon, Thomas P. and Maxwell, John W., Self-Regulation, Taxation, and Public Voluntary Environmental Agreements (November 1, 2000). IU Kelley, School Dept. of Bus. Econ. & Public Policy Working Paper No. 00-12. Available at SSRN: https://ssrn.com/abstract=252494 or http://dx.doi.org/10.2139/ssrn.252494

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-615-1639 (Phone)

John W. Maxwell (Contact Author)

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

Department of Business Economics and Public Policy
Kelley School of Business, Indiana University
Bloomington, IN 47405
United States
812-855 9219 (Phone)
812-855 3354 (Fax)

HOME PAGE: http://johnwmaxwell.com

Indiana University, Department of Economics ( email )

Wiley Hall
Bloomington, IN
United States

Richard Ivey School of Business ( email )

The University of Western Ontario
1151 Richmond Street North
London, Ontario N6A3K7
Canada
5198502439 (Phone)
5198502306 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
289
Abstract Views
1,641
rank
103,563
PlumX Metrics