Potoski, Matthew; Prakash, Aseem --- "Voluntary Programs, Regulatory Compliance and the Regulation Dilemma" [2011] ELECD 941; in Parker, Christine; Nielsen, Lehmann Vibeke (eds), "Explaining Compliance" (Edward Elgar Publishing, 2011)

Book Title: Explaining Compliance

Editor(s): Parker, Christine; Nielsen, Lehmann Vibeke

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848448858

Section: Chapter 11

Section Title: Voluntary Programs, Regulatory Compliance and the Regulation Dilemma

Author(s): Potoski, Matthew; Prakash, Aseem

Number of pages: 18

Extract:

11. Voluntary programs, regulatory
compliance and the regulation
dilemma
Matthew Potoski and Aseem Prakash

INTRODUCTION

Voluntary programs are an important policy tool across sectors and
countries (Potoski and Prakash, 2009). Indeed, in addition to their popu-
larity in the governance of the for-profit sector, they are being increas-
ingly employed in the governance of the nonprofit sector (Gugerty and
Prakash, 2010). Our chapter examines how voluntary programs can help
government regulators and regulated firms to develop a cooperative
relationship in the context of enforcement and compliance with public
law. A voluntary program can be viewed as a codified standard or set of
policies that firms pledge to follow. We place enforcement interactions
between firms and government regulators in the context of the regula-
tion dilemma, a version of the familiar `prisoners' dilemma,' in which
individual, self-interested action produces collectively inferior outcomes.
Voluntary regulations have the potential to mitigate the regulation
dilemma by offering firms a mechanism for signaling to government regu-
lators their cooperative intentions. But in order for voluntary programs
to work in this capacity, they must provide credible signals about firms'
behavior of complying with program obligations. Since not all voluntary
programs function as desired, it is important to recognize that voluntary
programs are amenable to failure. While they have potential to mitigate
the conflictual relationship between the regulators and the regulated,
voluntary programs should not be viewed as the panacea for the ever
increasing compliance challenges facing modern societies. They function
in the shadow of ...