Environmental conflicts with SLAPP reputations

Abstract

Firms use the strategic lawsuit against public participation (SLAPP) against citizens who complain about poor compliance with environmental rules and regulations. As a consequence, lawmakers have proposed banning SLAPPs in public debate. Theory suggests, however, that a SLAPP ban might be inefficient because it eliminates the efficient signaling equilibrium. This study extends the conflict model to include reputation effects. Our results suggest that a SLAPP ban can increase efficiency but only under a restrictive set of assumptions. One such assumption is that a ban makes sense when firms do not use the SLAPP to build a reputation, which contradicts the spirit of why firms use it in the first place. A SLAPP ban might increase efficiency, however, if it reduces the efficiency losses of chills during the interim periods when a firm builds its reputation.