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Management article
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Reference no. CMR199
Published by: University of California, Berkeley
Published in: "California Management Review", 2001

Abstract

In the 1990s, Environmental Voluntary Agreements (VA''s) involving regulatory agencies and industry have emerged as the promise of the future in environmental policy circles. The collaborative mechanisms of VA''s can be conducive to the development of innovative solutions, which regulators or firms would have been unlikely to develop alone. From a business perspective, participation in VA''s can reduce the burden of regulation, facilitate the communication of environmental improvements, and allow firms to be ahead of competition for environmental products. However, the benefits of participating in VA''s can be outweighed by high transaction and administration costs if VA''s are not properly designed. This article discusses when participation in a VA offers strategic opportunities and when joining a VA might turn into a costly enterprise.

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Abstract

In the 1990s, Environmental Voluntary Agreements (VA''s) involving regulatory agencies and industry have emerged as the promise of the future in environmental policy circles. The collaborative mechanisms of VA''s can be conducive to the development of innovative solutions, which regulators or firms would have been unlikely to develop alone. From a business perspective, participation in VA''s can reduce the burden of regulation, facilitate the communication of environmental improvements, and allow firms to be ahead of competition for environmental products. However, the benefits of participating in VA''s can be outweighed by high transaction and administration costs if VA''s are not properly designed. This article discusses when participation in a VA offers strategic opportunities and when joining a VA might turn into a costly enterprise.

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