Centre for Development Economics
Department of Economics, Delhi School of Economics
ANNOUNCE A SEMINAR
Public Pressure and Heterogeneous Effects of Voluntary Pollution Regulation
Neha Khanna (Binghamton University, New York)
On Thursday, 15 October 2020 at 6:30 P.M.
With widespread environmental awareness, polluters face abatement pressure from two sources: formal regulation pressure and informal public pressure. While the impact of formal regulation on plant emissions is well understood, the role of public pressure in reducing pollution is less clear. We build a conceptual model highlighting the role of public pressure in environmental regulation in the context of voluntary pollution abatement. The launch of a voluntary pollution abatement program changes both regulatory pressure and public pressure albeit differently for participants and non-participants. Our theory describes these changes as well as the plant’s emission choices. We show that the effectiveness of a voluntary pollution abatement program depends on the cost from public scrutiny of participating firms and the associated risk of being labeled greenwashers: greater public scrutiny yields fewer program participants who free-ride thereby increasing the effectiveness of the program. Our model, which provides a framework for reconciling the mixed empirical results on the effectiveness of voluntary pollution abatement programs, is supported by data from the EPA’s 33/50 program.