Three Essays in Voluntary Regulation by Firms Open Access

Hammock, Michael Ralph (2010)

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Firms sometimes choose to undertake costly actions that are beneficial to their
customers or other business partners, but which are not required by regulation. These
three chapters examine why businesses might or might not undertake some voluntary
actions. Chapter one examines firms' pollution behavior, and concludes that firms do not
face an incentive to reduce their unregulated toxic emissions, but that the evidence is
consistent with firms using lobbying to permit higher levels of emissions. Chapter two
surveys the literature on the economics of information security, finding that while firms
may underprovide security (relative to the efficient level), some security problems have
been solved, and for others it is unclear that additional policy action is justified. Chapter
three examines the role of certification seals in online retail, and the use of such seals to
provide consumers with assurances of privacy, quality, and most importantly, security. It
finds evidence that security seals correlate with a price premium for online retailers,
suggesting that voluntary regulation may be working well in this area.

Table of Contents

Table of Contents: Contents Page 1 Chapter 1: Lobbying, Political Contributions, and Corporate Emissions: an Empirical Investigation 1 1.1 Introduction 1 1.2 Prior Literature 3 1.3 A Simple Model of Emissions and Political Behavior 8 1.4 The Data 12 1.5 Estimation One: Political Influence Allows Emissions 19 1.6 Estimation Two: Models Based on Damania and Maxwell et al. 22 1.7 Conclusion 25 Appendix 28 References 49 2 Chapter 2: A Review of the Economics of Information Security Literature 51 2.1 Introduction 51 2.2 The Problems: What Are They and How Big Are They? 52 2.3 An Aside: Retail Internet Security Technology 58 2.4 The Incentive Problems of Information Security 61 2.5 Improving Security: Private Solutions 66 2.6 Improving Security: Policy Solutions 71 2.7 Implications for the Future 77 2.8 Conclusions 79 References 80 3 Chapter 3: Do Certification Seals Permit a Price Premium 88 3.1 Introduction 87 3.2 Literature 91 3.3 The Hypothesis To Be Tested 94 3.4 Data 96 3.5 Estimation Technique and Results 101 3.6 Discussion 106 3.7 Conclusions 108 References 124 Tables and Figures Page Figure 1: U.S. Emissions, 1996 to 2000 16 Table 1.1: Firms in the Sample 28 Table 1.2: Summary Statistics 33 Table 1.3: Results for Level of Emissions, Panel Data with Fixed Effects 35 Table 1.4: Results for Change in Emissions, Panel Data with Fixed Effects 36 Table 1.5: Results for Level of Emissions, Panel Data with Random Effects 37 Table 1.6: Results for Level of Emissions (without logs), panel data with Random Effects 39 Table 1.7: List of Chemicals and Toxic Equivalency Potentials (TEPS) 41 Table 3.1: Variable Definitions 109 Table 3.2: Summary Statistics 113 Table 3.3: Page Source Search Terms 115 Table 3.4: Items and their Product Categories 117 Table 3.5: Regression 1 118 Table 3.6: Regression 2 119 Table 3.7: Regressions 3 and 4 121 Table 3.8: Regressions 5, 6, 7, and 8 122

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