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Information Disclosure as Environmental Regulation: A Theoretical Analysis

34 Pages Posted: 7 Aug 2006  

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics; Vanderbilt University - Law School; Resources for the Future

V. Santhakumar

Centre for Development Studies (CDS) India

Date Written: August 2006

Abstract

Governments around the world are beginning to embrace a new form of environmental regulation - mandatory disclosure of information. While information disclosure programs appear to have an impact on subsequent firm behavior - often resulting in lower levels of pollution - little is known about the costs and benefits of these programs and whether or not they enhance social welfare. This paper presents a simple bargaining model where mandatory information disclosure is used to overcome a lack of information on the part of the public. We characterize the conditions under which information disclosure will lead to a reduction in emissions, and ultimately, the conditions under which it will enhance social welfare. Several extensions of the model are briefly explored, including the effect of two sources of pollution - only one of which is subject to information disclosure.

Keywords: environmental regulation, information disclosure

JEL Classification: D62, H41, Q58

Suggested Citation

Cohen, Mark A. and Santhakumar, V., Information Disclosure as Environmental Regulation: A Theoretical Analysis (August 2006). Available at SSRN: https://ssrn.com/abstract=922487 or http://dx.doi.org/10.2139/ssrn.922487

Mark A. Cohen (Contact Author)

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-0533 (Phone)

HOME PAGE: http://https://business.vanderbilt.edu/bio/mark-cohen/

Vanderbilt University - Law School

131 21st Avenue South
Nashville, TN 37203-1181
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5000 (Phone)

V. Santhakumar

Centre for Development Studies (CDS) India ( email )

Trivandrum 695 011, Kerala
India

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