Standardized environmental management systems as an internal management tool



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André García, Francisco Javier and Alonso-Paulí, Eduard (2015) Standardized environmental management systems as an internal management tool. Resource and Energy Economics, 40 . pp. 85-106. ISSN 0928-7655

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In a principal-agent model we analyze the firm’s decision to adopt an informal or a standardized Environmental Management System (EMS). Our results are consistent with empirical evidence in several respects. A standardized EMS increases the internal control at the cost of introducing some degree of rigidity that entails an endogenous setup cost. Standardized systems are more prone to be adopted by big and well established firms and under tougher environmental policies. Firms with standardized EMS tend to devote more effort to abatement although this effort results in lower pollution only if public incentives are strong enough, suggesting a complementarity relationship between standardized EMS and public policies. Emission charges have both a marginal effect on abatement and a qualitative effect on the adoption decision that may induce a conflict between private and public interests. As a result of the combination of these two effects it can be optimal for the government to distort the tax in a specific way in order to push the firm to choose the socially optimal EMS. The introduction of standardized systems can result in win-win situations where firms, society and the environment get better off.

Item Type:Article
Uncontrolled Keywords:Environmental management system; Asymmetric information; Emission charges; Principal-agent model.
Subjects:Social sciences > Economics > Economic law
Social sciences > Economics > Public economy
JEL:Q58, D82, L51
ID Code:39806
Deposited On:27 Oct 2016 11:23
Last Modified:28 Jun 2020 17:26

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