Title: Green clubs
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.