The Rise of NGO Activism

Abstract

Activist NGOs increasingly oppose industrial projects that were approved by public regulators. We develop a model that explains this phenomenon. We consider a potentially-harmful industrial project that is subject to regulatory approval. The regulator can be influenced by the industry, and may approve the project even though it is harmful. However, an NGO may oppose it. We characterize the circumstances under which NGO opposition occurs and under which it is socially beneficial. The theory explains the role that NGOs have assumed in the last decades, and has implications for the social legitimacy of NGO activism and the appropriate degree of transparency of industrial activities.

Keywords: NGO activism, Public regulation, Industry influence, Private politics, Transparency

JEL Classification: D02, D74, D82