Institute for Social, Behavioral, and Economic Research

Within the context of environmental voluntary agreements (VAs), this paper analyzes how free riding affects the effectiveness of collective corporate political strategies that aim at shaping government policy. We demonstrate that substantive cooperative strategies are more likely to be pursued by firms that enter a VA at its initiation while free riding or symbolic cooperation is more likely to be adopted by late joiners. We demonstrate that late joiners and early joiners within VAs adopt different cooperative strategies because they face different institutional pressures. We also find that late joiners that cooperate only symbolically may endanger the overall effectiveness of a VA. Our analysis is based on the strategies of firms participating in the Climate Challenge Program established in 1995 by the U.S. Department of Energy (DOE) and the representatives of the national electric utilities to reduce greenhouse gas emissions.