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Green clubs

Author: Klaas van't Veld; Matthew J Kotchen; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2010.
Series: Working paper series (National Bureau of Economic Research), no. 16627.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
This paper treats programs in which firms voluntarily agree to meet environmental standards as "green clubs": clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality  Read more...
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Additional Physical Format: Print version:
Veld, Klaas van't.
Green clubs.
Cambridge, Mass. : National Bureau of Economic Research, ©2010
(DLC) 2011655859
Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Klaas van't Veld; Matthew J Kotchen; National Bureau of Economic Research.
OCLC Number: 693775940
Description: 1 online resource (33 pages) : illustrations.
Series Title: Working paper series (National Bureau of Economic Research), no. 16627.
Responsibility: Klaas van 't Veld, Matthew J. Kotchen.

Abstract:

This paper treats programs in which firms voluntarily agree to meet environmental standards as "green clubs": clubs, because they provide non-rival but excludable reputation benefits to participating firms; green, because they also generate environmental public goods. The model illuminates a central tension between the congestion externality familiar from conventional club theory and the free-riding externality familiar from the theory on private provision of public goods. We compare three common program sponsors--governments, industry, and environmental groups. We find that if monitoring of the club standard is perfect, a government constrained from regulating club size may prefer to leave sponsorship to industry if public-good benefits are sufficiently low, or to environmentalists if public-good benefits are sufficiently high. If monitoring is imperfect, an important question is whether consumers can infer that a club is too large for its standard to be credible. If they can, then the government may deliberately choose an imperfect monitoring mechanism as a way of regulating club size indirectly. If they cannot, then this reinforces the government's preference for delegating sponsorship.

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