Participation in and Compliance with Public Voluntary Environmental Programs: An Evolutionary Approach

The joint evolution of participating and complying firms in a public VA, along with the evolution of the pollution stock is examined. Replicator dynamics modeling participation and compliance are combined with pollution stock dynamics. Fast-slow selection dynamics are used to capture the fact that decisions to participate in and further comply with the public VA evolve in different time scales. Evolutionary stable (ES) equilibria depend on the structure of the legislation and auditing probability. Partial participation and partial compliance can be ES equilibria, with possible multiplicities, in addition to the monomorphic equilibria of full (non) compliance. Convergence to these equilibria could be monotonic or oscillating. Full participation and compliance can be attained if the regulator is pre-committed to certain legislation and inspection probabilities, or by appropriate choices of the legislatively set emission level and the non-compliance fine.

[1]  S. Sastry.  Nonlinear Systems: Analysis, Stability, and Control , 1999 .

[2]  Nirvikar Singh,et al.  Regulating externalities through testing , 1990 .

[3]  Fahad Khalil.  Auditing Without Commitment , 1997 .

[4]  C. Carraro,et al.  Participation Incentives and the Design of Voluntary Agreements , 2001 .

[5]  John W. Maxwell,et al.  Self-Regulation, Taxation, and Public Voluntary Environmental Agreements , 2000 .

[6]  Marian Weber,et al.  Marketable Permits, Market Power, and Cheating , 1996 .

[7]  Kathleen Segerson.  Voluntary vs. mandatory approaches to nonpoint pollution control: Complements or substitutes? , 1998 .

[8]  A. Malik,et al.  Markets for Pollution Control when Firms Are Noncompliant , 1990 .

[9]  P. Sauer.  Voluntary agreements in environmental policy , 2001 .

[10]  Kathleen Segerson,et al.  Voluntary Environmental Agreements: Good or Bad News for Environmental Protection? , 1998 .

[11]  W. Wasow.  Asymptotic expansions for ordinary differential equations , 1965 .

[12]  John K. Stranlund,et al.  Endogenous monitoring and enforcement of a transferable emissions permit system , 1999 .

[13]  Madhu Khanna,et al.  EPA's Voluntary 33/50 Program: Impact on Toxic Releases and Economic Performance of Firms , 1999 .

[14]  A. Malik,et al.  Self-Reporting and the Design of Policies for Regulating Stochastic Pollution , 1993 .

[15]  R. Nelson.  Recent Evolutionary Theorizing about Economic Change , 2005, Technology, Institutions, and Economic Growth.

[16]  Monica Eberle,et al.  Theoretical topics in ecological economics , 2003 .

[17]  A. Xepapadeas.  Regulation and Evolution of Harvesting Rules and Compliance in Common Pool Resources , 2003 .

[18]  Laurent Franckx,et al.  The Use of Ambient Inspections in Environmental Monitoring and Enforcement When the Inspection Agency Cannot Commit Itself to Announced Inspection Probabilities , 2002 .

[19]  A. Keeler,et al.  Incomplete enforcement with endogenous regulatory choice , 1994 .

[20]  Rajiv Sethi,et al.  The Evolution of Social Norms in Common Property Resource Use , 1996 .