Firm's Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach

Stanford GSB Research Paper No. 1806

41 Pages Posted: 31 Aug 2003

See all articles by Magali A. Delmas

Magali A. Delmas

University of California, Los Angeles (UCLA)

Alfred A. Marcus

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: May 2003

Abstract

This paper extends transaction costs economics to analyze relationships between firms and regulatory agencies. It compares the economic efficiency of firm-agency governance structures for dealing with pollution reduction. The transaction costs of three ideal type governance structures are analyzed: command and control regulation, market based mechanisms, and negotiated agreements. We propose that the choice of governance structure will depend on the strategies firms are pursuing given their transaction attributes and market opportunities.

Suggested Citation

Delmas, Magali A. and Marcus, Alfred A., Firm's Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach (May 2003). Stanford GSB Research Paper No. 1806. Available at SSRN: https://ssrn.com/abstract=417603 or http://dx.doi.org/10.2139/ssrn.417603

Magali A. Delmas

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

Alfred A. Marcus (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States
612-624-2812 (Phone)
612-625-2873 (Fax)

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