European Journal of Law and Economics

, Volume 23, Issue 2, pp 135–149

Environmental voluntary behaviour and crowding-out effects: regulation or laissez-faire?

Authors

    • Institute of Health Management and Health EconomicsUniversity of Oslo
Article

DOI: 10.1007/s10657-007-9008-8

Cite this article as:
Grepperud, S. Eur J Law Econ (2007) 23: 135. doi:10.1007/s10657-007-9008-8

Abstract

The purpose of this paper is to investigate what the consequences are if environmental regulation in terms of a price mechanism (effluent charges) erodes moral motivation (crowding-out). The findings suggest that a regime relying on voluntarism can do better than a mandatory regime depending on the number of individuals being intrinsically motivated, degree of moral motivation, crowding effects, and whether or not ethical utilities are accounted for. The optimal tax scheme is a discriminatory one with rates that differ across moral and non-moral individuals. This tax-scheme induces the first-best solution when social costs are considered, while the same solution becomes unattainable for a social welfare function. The model provides a rationale for why governments sometimes rely on voluntary effort.

Keywords

Voluntary abatementMoral behaviourOver-compliance

JEL Classifications

D62H21K40

Copyright information

© Springer Science+Business Media, LLC 2007