Clubs, Credence Standards, and Social Pressure
Clubs, Credence Standards, and Social Pressure
This chapter is a presentation of a theory of industry collective action despite the arousal of change in practice and policies created by social pressure from “private politics,” which is often used to attempt a change in the behaviour of economic agents. More often than not, nongovernmental organizations and social activists are these agents. The chapter focuses on how these clubs, or voluntary organizations, were formed, their choice of a standard for their products, and how that choice is affected by social pressure. Here we see certain models and examples of which firms would be inclined to join an industry-sponsored club and which would not. The chapter formulates a complex model of industry behaviour and a model of social pressure by combining two particular models. In conclusion, it discusses a number of aspects of the collective choice of credence standards and why they require additional research.
Keywords: industry collective action, private politics, economic agents, social activists, voluntary organizations, social pressure, industry-sponsored club
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