Voluntary Agreement Of Cooperation Between Firms

Lyon and Maxwell (1999) explain several reasons for companies that voluntarily protect the environment beyond their requirements. First, companies may be able to reduce costs by improving their environmental performance. Porter and van der Linde (1995) argue that environmental pollution is a signal that companies are ineffective because they indicate that polluters do not receive the highest performance of their production practices. They suggest that companies have sufficient opportunities to improve their environmental performance while improving profitability, and argue that companies that do not use these opportunities are excluded by companies that do. Palmer, Oates and Portney (1995) dispute this theory and argue that companies are indeed very smart about allocating resources. At least in the mid-19th century, courts in Europe and elsewhere understood that insurance contracts deviated considerably from what was traditionally considered to be an ideal type of contract (a voluntary agreement with negotiated terms between two parties with the same bargaining power). In many cases, the role of insurance agency as a custodian can hardly be exempted from the voluntary nature of insurance. Insurance companies use typical standard contracts almost everywhere with conditions that are not applicable. And in all cases, but in very few cases, the parties do not have the same bargaining power. As a general rule, the insurance company is a much larger economic entity; Competing insurance companies rarely offer very different terms (except sometimes price) and the insurance company has information about the size and value of the contract that the insurance claimant does not have. Moreover, the promising nature of insurance gives the insurance company enormous power as soon as the insured is entitled; on that date, the insured cannot take out a new insurance policy. 8.1 The parties act as independent entities and are not authorized to enter into agreements on behalf of the other party or to engage them by other means.

We think of the case where the government rewards companies by the s rate for each unit reducing pollution in relation to a certain basic amount e0. As a result, the company that issues emissions receives payment of the grant (e0 e).