Technology and the Evolution of the Regulatory State

The central question in modern regulatory states is how to balance the sword of public enforcement with the setting of incentives for firms to comply with the law - broadly, to pursue the public good - just because it is in their interest to do so. We assess the ability of the state to encourage firms to take such socially responsible action in the case of the worldwide voluntary environmental protection standard ISO 14001. We argue that across a broad variety of countries the incidence of compliance is fundamentally constrained by technological development. Yet, a small subset of countries (with high regulatory stringency) can shift some of the burden of regulatory oversight to the firms themselves. By separating out the effects of technology and regulatory stringency, we offer a unique multilevel approach that allows us to move beyond past studies and to better understand the consequences of what designers can and cannot control