A Rent-Seeking Model of Voluntary Overcompliance

Marco A. Haan*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)
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Abstract

We provide an explanation for voluntary overcompliance, the phenomenon in which firms voluntarily choose to overcomply with environmental regulations. In our model, a polluting firm faces a rent-seeking contest with an environmental group. By making a small concession beforehand, i.e. by overcomplying voluntary, the firm lowers the stake the environmental group has in the rent seeking contest, which lowers the group's lobbying effort in that contest. Voluntary overcompliance increases social welfare, yet the firm undersupplies overcompliance from a welfare point of view. An increase in the effectiveness of lobbying of the environmental group, increases the level of overcompliance.

Original languageEnglish
Pages (from-to)297-312
Number of pages16
JournalEnvironmental & Resource Economics
Volume65
Issue number1
DOIs
Publication statusPublished - Sep-2016

Keywords

  • Voluntary overcompliance
  • Regulation
  • Rent-seeking

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