We develop a multiple-firm model of an industry's voluntary adoption of environmental protection measures to achieve a predetermined industry-wide emissions reduction target under an explicit threat of imposition of an emissions tax. We examine the free-riding incentive of individual firms and...

There is an increasing interest in the use of voluntary approaches to environmental protection as an alternative to more traditional regulatory approaches. In many cases, entire industries are faced with possible imposition of costly environmental policies if environmental goals are not met...