Abstract
The desire to avoid rousing community hostility may encourage firms to behave in an environmentally responsible manner. Firms may engage in corporate social responsibility (CSR) to maintain community support and/or to regain the support of a community where it has been lost. It has been conjectured that such 'informal regulation' could effectively replace formal intervention in some settings, and usefully complement it in others. We explore these conjectures with mixed results. Informal regulation is necessarily less efficient than a well-designed formal alternative and the pattern of green behavior induced by the threat of community hostility may increase or decrease welfare. The existence of community pressure may increase or decrease the optimal calibration of a formal intervention (in this case an environmental tax) and may complement or detract from the incentives generated by an optimally calibrated tax.
| Original language | English |
|---|---|
| Pages (from-to) | 427-441 |
| Number of pages | 15 |
| Journal | Journal of Environmental Economics and Management |
| Volume | 64 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Nov 2012 |
Bibliographical note
Funding Information:We are grateful to Simon Skene, Ron Smith, seminar participants at University College London, two referees and an editor of this journal for helpful comments and advice. Heyes acknowledges financial support from the Social Sciences and Humanities Research Council of Canada (SSHRCC) under Insight Grant 230701-190299-2001 and the Canada Research Chair Programme.
Keywords
- Community pressure
- Corporate social responsibility
- Informal regulation
ASJC Scopus subject areas
- Economics and Econometrics
- Management, Monitoring, Policy and Law
