Green clubs
By: Klaas van 't Veld, Matthew J. Kotchen
Contributors: Matthew J. Kotchen; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16627; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16627.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "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"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 4/7/2011.

Includes bibliographical references.

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Mode of access: World Wide Web.