Government Clubs: Theory and Evidence from Voluntary Environmental Programs

Abstract

Voluntary environmental clubs run by governmental organizations have the potential to offer significant rewards to the businesses that join beyond brand image enhancement. Chief among these potential rewards is relief from otherwise onerous environmental regulations. In this paper we show that governmental voluntary programs offering the most significant regulatory benefits tend also, paradoxically, to have the fewest members. We explain this puzzling finding by focusing on (a) how the design of these programs corresponds with the rewards they offer members and (b) how membership levels in these clubs correspond with their design. While government agencies in theory have the most to offer facilities that participate in the voluntary programs they operate, in practice these agencies face a political environment that leads them to combine greater rewards with more demanding membership requirements. As it turns out, the rewards government offers are generally not significant enough to overcome the additional demands agencies seem to need to place on any potential members seeking these rewards. We conclude that, given the political dynamic surrounding the design of government clubs, the level of participation in government programs that offer substantial rewards beyond image enhancement can be predicted to remain relatively low.