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The ground for negotiation: Zoning for risk reduction around hazardous plants

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Date
2020-12
Dewey
Economie de la terre et des ressources naturelles
Sujet
Industrial disasters; Self-insurance; Externalities; Behavioral constraint; Labels in risk regulation; Land-use negotiation
JEL code
R.R5.R52; Q.Q5.Q53; D.D9.D91; D.D8.D83
Journal issue
Journal of Economic Behavior & Organization
Volume
180
Publication date
12-2020
Article pages
657-677
Publisher
Elsevier
DOI
http://dx.doi.org/10.1016/j.jebo.2019.11.022
URI
https://basepub.dauphine.fr/handle/123456789/21581
Collections
  • LEDa : Publications
Metadata
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Author
Grislain-Letrémy, Céline
2579 Centre de Recherche en Économie et Statistique [CREST]
Villeneuve, Bertrand
559342 Laboratoire d'Economie de Dauphine [LEDa]
Type
Article accepté pour publication ou publié
Abstract (EN)
The industrialists are liable for any damage they cause to neighboring households. Consequently, households do not have to pay for the risk they create by locating in exposed areas. A common and efficient self-insurance strategy for the firm is to freeze land, or to negotiate land-use restrictions. When people understand only simple messages about risk, the boundaries of the building zone are the ground for negotiation with the mayor. Typical scenarios regarding the distribution of bargaining power between the firm and the mayor are examined. In the comparative statics, we show how red zones are revised as technology or demography change. Further, we give the conditions for a purple zone (limit red zone as the population grows) and a green zone (limit inhabitable zone as the risk grows) to exist.

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