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American Economic Review: Vol. 103 No. 3 (May 2013)

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The Informational Role of Voluntary Certification: Evidence from the Mexican Clean Industry Program

Article Citation

Foster, Andrew D., and Emilio Gutierrez. 2013. "The Informational Role of Voluntary Certification: Evidence from the Mexican Clean Industry Program." American Economic Review, 103(3): 303-08.

DOI: 10.1257/aer.103.3.303

Abstract

In the presence of imperfect information, voluntary certification can provide an important complement to mandatory inspections as a basis for environmental regulation in low income countries. Using data from Mexico's Clean Industry Program, we show that patterns of compliance and certification by sector are consistent with a model in which selection into the voluntary program permits more efficient targeting of regulator effort. As expected given the informational role played by certification in the model, we also find evidence, for a sample of publicly traded firms, of positive stock price deviations linked to the announcement of certification.

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Authors

Foster, Andrew D. (Brown U)
Gutierrez, Emilio (CIE, ITAM, Mexico City)

JEL Classifications

O13: Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Products
O14: Industrialization; Manufacturing and Service Industries; Choice of Technology
Q52: Pollution Control Adoption Costs; Distributional Effects; Employment Effects
Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Q58: Environmental Economics: Government Policy


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