The authors start from the premise that governments act as agents of the public in regulating pollution, using the instruments at their disposal. But when formal regulatory mechanisms are absent or ineffective, communities will seek other means of translating their preferences into reality....

Industrial plants face pressure to abate water pollution from many sources, national and local, through formal government regulation and through more informal pressure from consumer groups and concern for the firm's reputation. Formal regulation tends to reflect the bargaining power of local...

The authors test a model of supply-demand relations in an implicit market for environmental services when formal regulation is absent. They use plant-level data from Indonesia for 1989-90, before the advent of nationwide environmental regulation. Treating pollution as a derived demand for...