Stakeholder scrutiny, urban bias, and the private provision of public goods

Abstract

While many scholars have studied “urban bias” in public policy, the potential for bias in the private provision of public goods has received little attention. Private certification is a mechanism encouraging private provision of environmental public goods. We show that within countries, there are often wide disparities in certification rates between firms located in urban and non-urban areas. However, these disparities can be mitigated if there is a countervailing force: scrutiny of firms' practices by key stakeholders. We suggest that the presence of strong civil society, independent media, a functioning state regulatory apparatus, and multinational owners can ameliorate the urban bias in certification uptakes. We test this argument with global, firm-level data covering over 40,000 firms in ninety-three countries. Our analyses suggest that an urban bias is mitigated when stakeholders—both public and private—have the freedom and capacity to scrutinize firms' activities.