Self-Regulation by Associations: Collective Action Problems in European Environmental Regulation

Research for this paper has been supported by the European Union under the 6th Framework programme (Contract No CIT1-CT-2004-506392). For more information about the Integrated Project "New Modes of Governance", co-ordinated by the European University Institute in Florence, please visit the project website at www.eu-newgov.org.How and to what effect do firms coordinate their actions in order to deal with the negative external effects of productive activity? Under which conditions do firm associations engage in environmental self-regulation and what kind of governance devices do they develop in order to tackle the specific regulatory challenges at stake? Is the 'shadow of hierarchy', the credible threat of legislation, executive intervention or court rulings, a necessary condition for associative action to emerge? Or is it only necessary if a redistributive problem is at stake? These are the questions discussed in this article. We will first develop the theoretical argument based on economic institutionalism, derive hypotheses and then submit the propositions to a first empirical assessment of associative self-regulation on waste recycling in the plastic and paper industry