Public Voluntary Programs Reconsidered

24 Pages Posted: 7 Mar 2007

See all articles by John W. Maxwell

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

Thomas P. Lyon

University of Michigan, Stephen M. Ross School of Business

Date Written: 2007

Abstract

"Public voluntary programs" (PVPs) involve government offers of positive publicity and technical assistance to firms that reach certain environmental goals. A growing body of empirical evidence suggests these programs often have little impact on the behavior of their participants. A natural policy conclusion would be to eliminate these programs, but this paper offers several reasons not to jump to such a conclusion. We first present a political-economic framework in which PVPs are viewed as modest subsidies used when political opposition makes stronger environmental regulation infeasible. We then explore the design of PVPs in detail, showing how PVPs can potentially enhance the diffusion of cost-effective techniques for pollution abatement, so long as the information involved is not competitively sensitive. Identifying the effects of PVPs econometrically is difficult because information is likely to diffuse to non-participants. Thus, after the early phases of even a successful PVP, it may well be impossible to detect a difference in performance between participants and non-participants.

Keywords: Public Voluntary Programs, Regulatory Threat, Information Diffusion

JEL Classification: L2, L5, H2

Suggested Citation

Maxwell, John W. and Lyon, Thomas P., Public Voluntary Programs Reconsidered (2007). Available at SSRN: https://ssrn.com/abstract=967490 or http://dx.doi.org/10.2139/ssrn.967490

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
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London, Ontario N6A3K7
Canada
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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)

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