The appeal of voluntary environmental programs: which firms participate and why?

Authors

  • J Videras,

    1. Economics Department, Campus Box 256, University of Colorado, Boulder, CO, USA, Phone: 1 303 492 6394, Fax: 1 303 492 8960 E-mail: viderasn@colorado.edu
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  • A Alberini

    1. Department of Agricultural and Resource Economics, 2200 Symons Hall, University of Maryland, College Park, MD 20742, USA, Phone: 1 301 405 1267, Fax: 1 301 314 9091 E-mail: aalberini@arec.umd.edu
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    • *

      This is a revision of a paper presented at the 74th Annual Meeting of the Western Economic Association, July 8, 1999, San Diego, in a session organized “Canada and United States Environmental Poricy: Voluntary Programs for Environmental Protection.” The authors thank the Investors Responsibility Research Center (IRCC), from which we acquired our data. All opinions are ours and do not represent the IRRC's official views


Abstract

Why do firms participate in the EPA's voluntary environmental programs? Possible reasons include: (1) to appeal to consumers who demand ‘green’ products; (2) to preempt government regulation; (3) to seek regulatory relief from the agency; and (4) to gain a competitive advantage over competitors. This article examines the determinants of participation in voluntary environmental programs, focusing on testing hypotheses 1 and 3. To test 2, a different approach is used than in previous literature. The focus is on a specified universe of firms (manufacturing firms in the Standard & Poor 500), and their participation in each of three EPA voluntary programs (33/50, Green Lights, and WasteWi$) referring to differently regulated pollutants is analyzed. Our empirical analyses reveal that (1) publicity is an important component of participation; (2) the worse the environmental track record of the firm, the more likely the firm is to participate, but only in programs directly related to highly regulated pollutants; and (3) firms that scrutinize their environmental performance more carefully are wary of newer programs with uncertain reach of the public and uncertain benefits. Firms appear to value the information/technology transfer aspect of joining a program.

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