Do Private Regulations Ratchet Up? How to Distinguish Types of Regulatory Stringency and Patterns of Change

Abstract

Due to inconsistent concepts of regulatory stringency, scholars offer conflicting accounts about whether competing private governance initiatives “race to the bottom,” “ratchet up,” “converge,” or “diverge.” To remedy this, we offer a framework for more systematic comparisons across programs and over time. We distinguish three often-conflated measures of stringency: regulatory scope, prescriptiveness, and performance levels. Applying this framework, we compare competing U.S. forestry certification programs, one founded by environmental activists and their allies, the other by the national industry association. We find ‘upwardly divergent’ policy prescriptiveness: both programs increased in prescriptiveness, but this increase was greater for the activist-backed program. Furthermore, requirements added by the activist-backed program were more likely to impose costs on firms than requirements added by the industry-backed program, many of which may even benefit firms. These results are consistent with the hypothesis that industry-backed programs emphasize less costly types of stringency than activist-backed programs. They also reveal patterns of change that previous scholarship failed to anticipate, illustrating how disentangling types of stringency can improve theory building and testing.

Governing complex societal problems: The impact of private on public regulation through technological change

“…On a more abstract level, our analysis reveals a successful case of a ratcheting-up process between both public and private regulation (Cashore et al 2007;Overdevest 2010;Meckling et al 2017;Pahle et al 2018;Judge-Lord et al 2020). As a consequence of technological change induced by private regulation, regulators were able to subsequently increase the stringency of public regulation.…”

“…Finally, our paper contains an important message for regulators in fields where technology is relevant: Depending on governance capacity and contextual factors, private regulation can serve as a lever to increase regulatory stringency over time through the mechanism of technological change. As such, the intentional introduction of private regulatory instruments could increase the political feasibility of public regulation in fields that are characterized by inertia and lock-in (Cashore et al 2007;Levin et al 2012;Meckling et al 2015Meckling et al , 2017Judge-Lord et al 2020). Successfully leveraging this rationale, however, requires technology-smart governance (Beuse et al 2018): Depending on the characteristics and maturity of a technology, as well as the capabilities of the local industry, different combinations of public and private regulatory instruments might be more effective and politically feasible than others (Schmidt & Huenteler 2016;Breetz et al 2018).…”

“…The debate regarding whether private regulatory instruments have a positive, neutral, or negative effect on governance performance is still ongoing (Howlett & Rayner 2007;Carrigan & Coglianese 2011;Hoffmann 2011;Matschoss & Repo 2018;Chan et al 2019). The extant literature is mostly comparing private regulatory instruments across jurisdictions or sectors (Judge-Lord et al 2020;van der Heijden 2020). However, these studies have resulted in inconclusive empirical findings (Hsu et al 2019).…”

“…The extant literature is mostly comparing private regulatory instruments across jurisdictions or sectors (Judge‐Lord et al . 2020 ; van der Heijden 2020 ). However, these studies have resulted in inconclusive empirical findings (Hsu et al .…”

“…Note that we focus on changes in regulatory stringency (Judge‐Lord et al . 2020 ) in order to capture instrument interaction.…”