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Optimal Environmental Radical Activism

Author

Listed:
  • Mireille Chiroleu-Assouline

    (Paris School of Economics, University Paris 1 Panthéon-Sorbonn)

  • Ariane Lambert-Mogiliansky

    (Paris School of Economics)

Abstract
We study the problem faced by activists who want to maximize firms' compliance with high environmental standards. Our focus is on radical activism which relies on non-violent civil disobedience. Disruptive actions and the threat thereof are used to force firms to concede i.e., to engage in self-regulation. We address the optimal use of scarce activist resources in face of incomplete information by looking at a general mechanism, directly adapted from Myerson's (1981) optimal auction theory. The characterization informs that the least vulnerable and most polluting firms should be targeted with disruptive actions while the others are granted a guarantee not to be targeted in exchange for a concession. This characterization allows studying the determinants of the activist's strength and how it is affected by repression, a central feature for civil disobedience. We find that optimal radical activism is relatively resilient to repression. In an extension that accounts for asymmetry between firms' abatement cost, we find that the mechanism optimizes the allocation of abatment efforts and creates incentives for innovation. We discuss some other welfare properties of optimal activism.

Suggested Citation

  • Mireille Chiroleu-Assouline & Ariane Lambert-Mogiliansky, 2020. "Optimal Environmental Radical Activism," Working Papers 2020.07, FAERE - French Association of Environmental and Resource Economists.
    • Handle: RePEc:fae:wpaper:2020.07
    as

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    References listed on IDEAS

    as
    1. Shon R. Hiatt & Jake B. Grandy & Brandon H. Lee, 2015. "Organizational Responses to Public and Private Politics: An Analysis of Climate Change Activists and U.S. Oil and Gas Firms," Organization Science, INFORMS, vol. 26(6), pages 1769-1786, December.
    2. repec:hal:pseose:halshs-01109153 is not listed on IDEAS
    3. William Smith, 2012. "Policing Civil Disobedience," Political Studies, Political Studies Association, vol. 60(4), pages 826-842, December.
    4. David P. Baron, 2016. "Self‐Regulation and the Market for Activism," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 25(3), pages 584-607, September.
    5. Charles Eesley & Katherine A. Decelles & Michael Lenox, 2016. "Through the mud or in the boardroom: Examining activist types and their strategies in targeting firms for social change," Strategic Management Journal, Wiley Blackwell, vol. 37(12), pages 2425-2440, December.
    6. Michael J. Lenox & Charles E. Eesley, 2009. "Private Environmental Activism and the Selection and Response of Firm Targets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(1), pages 45-73, March.
    7. David P. Baron & Daniel Diermeier, 2007. "Strategic Activism and Nonmarket Strategy," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(3), pages 599-634, September.
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    9. Koessler, Frédéric & Lambert-Mogiliansky, Ariane, 2014. "Extortion and political-risk insurance," Journal of Public Economics, Elsevier, vol. 120(C), pages 144-156.
    10. Heyes, Anthony & Lyon, Thomas P. & Martin, Steve, 2018. "Salience games: Private politics when public attention is limited," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 396-410.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Activism; Self-regulation; Mechanism design; Repression;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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