Coase-Sandor Working Paper Series in Law and Economics

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Working Paper

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Do voluntary corporate prosocial efforts reduce or amplify support for government regulation? We build a theory of opposing mechanisms. Voluntary efforts could make it seem like the problem is being fixed (“Coca-Cola is already tackling plastic waste!”) and thus that regulation is unnecessary. Or they could make the problem seem more important (“even Walmart is addressing this”) or regulation more feasible (“regulation will not impose excessive costs on industry”). Because these factors move in opposing directions, we posit that any crowding-in or crowding-out effects will be small and context-dependent. To test our theory, we ran two preregistered, randomized controlled studies with over 2800 participants, drawing from the real-world materials firms used to advertise their voluntary efforts. We find no economically significant effects from the voluntary efforts on popular support for government regulation, and we find evidence consistent with our theory that competing mechanisms are at play.

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