Why Do Firms Pollute (and Reduce) Toxic Emissions?

40 Pages Posted: 7 Aug 2006

See all articles by Mark A. Cohen

Mark A. Cohen

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

Shameek Konar

PHB Hagler Bailly, Inc.

Date Written: March 2000

Abstract

There is a growing trend in both the U.S. and abroad for firms to reduce emission levels beyond the legally required mandate. One of the most publicized examples of this phenomenon in the U.S. is the release of toxic chemicals. These emissions have come under increasing scrutiny since passage of the "Right-to-Know" law mandating the public availability of toxic release inventory (TRI) information beginning in 1989. In response to this new information, some firms have dramatically reduced toxic chemical emissions. This paper explores the factors that both explain differences across firms in their initial toxic emission levels and in the reductions beyond any legally required levels subsequent to the availability of public information on TRI. The underlying theory is that firm-level pollution varies because of firm-specific factors that affect both the "ability" and "incentive" for firms to reduce pollution. In comparing emission levels between 1989 and 1992, we find that the largest firms are most likely to reduce emissions subsequent to this new information being made public. We also find that financial ability plays an important role in emission levels. On the other hand, we were unable to find any evidence that firms who advertise more heavily to consumers or had significant negative media attention concerning their emission levels reduced their emissions more than average after controlling for firm size.

Keywords: pollution, voluntary regulation, toxic emissions

JEL Classification: D62, H41, Q58

Suggested Citation

Cohen, Mark A. and Konar, Shameek, Why Do Firms Pollute (and Reduce) Toxic Emissions? (March 2000). Available at SSRN: https://ssrn.com/abstract=922491 or http://dx.doi.org/10.2139/ssrn.922491

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)

Shameek Konar

PHB Hagler Bailly, Inc. ( email )

One Memorial Drive
Cambridge, MA 02141-1344
United States

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