Examines an NGO's use of market forces vs. regulation to influence firms' environmental strategies

What is it about?

We study a nongovernmental organization’s (NGO’s) decisions when it attempts to remove a substance of concern from commercial use in a competitive market. Specifically, we determine under what market and regulatory conditions an NGO should target the industry versus the regulatory body to influence firms to replace the substance. We examine how the NGO’s strategy changes as the NGO’s pragmatism (i.e., the extent to which the NGO incorporates firms’ profits into its decision making) increases.

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Why is it important?

We find that as the pragmatism of the NGO increases, the NGO should increasingly leverage the competition between firms to ensure that firms adopt a replacement. Furthermore, we show that the potential for a firm to lobby can benefit consumers by motivating the NGO to exert more effort and increase the market awareness to a substance, thereby forcing the firm to replace.