ABSTRACT
Voluntary agreements have become a vital alternative to mandatory policies based on regulation or legislation, specifically in the field of environmental protection. For example, in addition to a variety of voluntary farm programs, several federal programs have been designed in the United States to convince firms to reduce pollution voluntarily (see Wu and Babcock 1999). In the European Union, the majority of Member States rely on environmental agreements as a policy tool, with a wide range of applications, including water and air pollution and waste management (EC 1996). In the Organisation for Economic Co-operation and Development countries, more than 350 voluntary schemes have been established, mainly in Germany and the Netherlands (OECD 2000).
