Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/srt/wpaper/0821.html
   My bibliography  Save this paper

Relational Voluntary Environmental Agreements when Emissions Are Unverifiable

Author

Listed:
  • Berardino Cesi

    (University of Rome Tor Vergata, Rome, Italy)

  • Alessio D'Amato

    (University of Rome †Tor Vergata†, Italy)

Abstract
Environmental regulation and pollution control may clash against the presence of unverifiable tasks, like source specific emissions. To tackle this issue we reshape a voluntary agreement instrument, already available in the received literature, in a dynamic perspective by means of a relational contracting approach. Setting up a Relational Voluntary Environmental Agreement (REA) helps the regulator to solve the unverifiability issue, and may provide polluting firms with the incentives to stick to environmental requirements. In an N firms symmetric context we show that even if emissions are not contractible across firms, so that enforcement cannot be delegated to a third party, if firms themselves are sufficiently patient, a self-enforcing equilibrium, under which the environmental objective is voluntarily met, exists. Finally, the policy analysis reveals that our REA may be welfare-improving with respect to a Voluntary Environmental Agreement on contractible emissions. This occurs when the enforcement cost savings under a relational agreement are larger than the additional social costs related to free riding.

Suggested Citation

  • Berardino Cesi & Alessio D'Amato, 2021. "Relational Voluntary Environmental Agreements when Emissions Are Unverifiable," SEEDS Working Papers 0821, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jun 2021.
    • Handle: RePEc:srt:wpaper:0821
    as

    Download full text from publisher

    File URL: http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0821.pdf
    File Function: First version, 2021
    Download Restriction: no
    File URL: http://www.sustainability-seeds.org/papers/RePec/srt/wpaper/0821.pdf
    File Function: Revised version, 2021
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Relational Contracts; Environmental Policy; UnveriÂ…ability; Voluntary Environmental Agreement;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:srt:wpaper:0821. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alessandro Palma (email available below). General contact details of provider: http://www.sustainability-seeds.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.