A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO

Anthony Heyes; Andreas Marcel Oestreich

doi:10.1007/s11149-018-9370-1

A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO

Anthony Heyes, Andreas Marcel Oestreich^*

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

Abstract

We develop a model in which social pressure on a firm to behave well is jointly produced by a state regulator (EPA) and an NGO. The EPA and NGO differ in how they trade-off business versus environmental interests and also have access to different instruments in pursuit of their objectives. In particular, while the EPA will typically have the tools for detecting misbehaviour, the NGO can influence the intensity of social hostility directed towards those found to have misbehaved. EPA and NGO efforts may be strategic complements or substitutes, depending upon circumstances. We present a taxonomy of outcomes in the game between EPA and NGO in the spirit of Fudenberg and Tiroles’s (Am Econ Rev Pap Proc 74(2):361–366, 1984) classic taxonomy of business strategies. We also consider strategic delegation from NGO supporters to an NGO that has tastes over environmental and business interests different to their own.

Original language	English
Pages (from-to)	219-243
Number of pages	25
Journal	Journal of Regulatory Economics
Volume	54
Issue number	3
DOIs	https://doi.org/10.1007/s11149-018-9370-1
Publication status	Published - 1 Dec 2018

Bibliographical note

Funding Information:
Heyes acknowledges financial support from SSHRC under Insight Grant 435-2012-472 and the Canada Research Chair program. Oestreich acknowledges financial support from SSHRC under Insight Grant 435-2017-463. We are grateful to Matthieu Glachant, Steve Martin, Yi Li, Sandeep Kapur, participants at the Conference of the European Association of Environmental and Resource Economists (EAERE) Zurich in June 2016, the Rimini Conference in Economics and Finance (RCEF) Waterloo in September 2016, the Conference of the Canadian Economics Association (CEA) Antigonish in July 2017 and the World Congress of Environmental and Resource Economists (WCERE) Gothenburg in June 2018 for constructive conversations, and two referees from this journal for very constructive advice. Further materials to this paper can be found in an “Online Appendix” available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3269525.

Funding Information:
Heyes acknowledges financial support from SSHRC under Insight Grant 435-2012-472 and the Canada Research Chair program. Oestreich acknowledges financial support from SSHRC under Insight Grant 435-2017-463. We are grateful to Matthieu Glachant, Steve Martin, Yi Li, Sandeep Kapur, participants at the Conference of the European Association of Environmental and Resource Economists (EAERE) Zurich in June 2016, the Rimini Conference in Economics and Finance (RCEF) Waterloo in September 2016, the Conference of the Canadian Economics Association (CEA) Antigonish in July 2017 and the World Congress of Environmental and Resource Economists (WCERE) Gothenburg in June 2018 for constructive conversations, and two referees from this journal for very constructive advice. Further materials to this paper can be found in an “Online Appendix” available at: https://papers.ssrn.com/sol3/ papers.cfm?abstract_id=3269525.

Publisher Copyright:
© 2018, Springer Science+Business Media, LLC, part of Springer Nature.

Keywords

Environmental regulation
NGOs
Private politics
Social license
Strategic delegation

ASJC Scopus subject areas

Economics and Econometrics

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10.1007/s11149-018-9370-1

Cite this

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title = "A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO",

abstract = "We develop a model in which social pressure on a firm to behave well is jointly produced by a state regulator (EPA) and an NGO. The EPA and NGO differ in how they trade-off business versus environmental interests and also have access to different instruments in pursuit of their objectives. In particular, while the EPA will typically have the tools for detecting misbehaviour, the NGO can influence the intensity of social hostility directed towards those found to have misbehaved. EPA and NGO efforts may be strategic complements or substitutes, depending upon circumstances. We present a taxonomy of outcomes in the game between EPA and NGO in the spirit of Fudenberg and Tiroles{\textquoteright}s (Am Econ Rev Pap Proc 74(2):361–366, 1984) classic taxonomy of business strategies. We also consider strategic delegation from NGO supporters to an NGO that has tastes over environmental and business interests different to their own.",

keywords = "Environmental regulation, NGOs, Private politics, Social license, Strategic delegation",

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note = "Funding Information: Heyes acknowledges financial support from SSHRC under Insight Grant 435-2012-472 and the Canada Research Chair program. Oestreich acknowledges financial support from SSHRC under Insight Grant 435-2017-463. We are grateful to Matthieu Glachant, Steve Martin, Yi Li, Sandeep Kapur, participants at the Conference of the European Association of Environmental and Resource Economists (EAERE) Zurich in June 2016, the Rimini Conference in Economics and Finance (RCEF) Waterloo in September 2016, the Conference of the Canadian Economics Association (CEA) Antigonish in July 2017 and the World Congress of Environmental and Resource Economists (WCERE) Gothenburg in June 2018 for constructive conversations, and two referees from this journal for very constructive advice. Further materials to this paper can be found in an “Online Appendix” available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3269525. Funding Information: Heyes acknowledges financial support from SSHRC under Insight Grant 435-2012-472 and the Canada Research Chair program. Oestreich acknowledges financial support from SSHRC under Insight Grant 435-2017-463. We are grateful to Matthieu Glachant, Steve Martin, Yi Li, Sandeep Kapur, participants at the Conference of the European Association of Environmental and Resource Economists (EAERE) Zurich in June 2016, the Rimini Conference in Economics and Finance (RCEF) Waterloo in September 2016, the Conference of the Canadian Economics Association (CEA) Antigonish in July 2017 and the World Congress of Environmental and Resource Economists (WCERE) Gothenburg in June 2018 for constructive conversations, and two referees from this journal for very constructive advice. Further materials to this paper can be found in an “Online Appendix” available at: https://papers.ssrn.com/sol3/ papers.cfm?abstract_id=3269525. Publisher Copyright: {\textcopyright} 2018, Springer Science+Business Media, LLC, part of Springer Nature.",

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A theory of social license when regulatory pressure is jointly produced by an EPA and an NGO

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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