Firm participation behavior in economic incentive-based resource conservation programs

Abstract

Currently, various incentive programs have been implemented under the resource conservation side to change the behavior of the people to more beneficial to society. Regarding the urgency to tackle the climate change issue, the importance of incentive program has never been stronger than before. Most of the previous studies that dealt with incentive programs have been overlooked participation processes since they have focused on already participated firms. This study focuses on the participation process of the economic incentive-based program which has a voluntary characteristic and found out interesting implications from the analysis. First, the behavior of the firm is affected by dynamics between cost and expected benefit under a voluntary program, which causes determinants that were regarded as drivers for active participation, to be ineffective. Second, firms that have a low-cost option for participation, participate more actively in the program. This indicates that promoting low-cost options for the firm is crucial for the expansion of voluntary incentive programs at an early stage.