Ignacio Adrian Lerer has posted Environmental Law and the Myth of Corporate Citizenship: Intentionality Mismatch in Ecological Regulation on SSRN. Here is the abstract:
Environmental law assumes corporations internalize environmental values, comply voluntarily when monitoring is weak, and reciprocate regulatory cooperation with genuine stewardship. This assumes corporations operate as moral agents (Level 3 intentionality).
I argue this assumption is false. Corporations are Level 1 optimizers: they minimize Cost(compliance) vs Cost(violation × P(detection)). No moral dimension operates. Applying Multilevel Game Theory, the Generalized Intentionality Mismatch Theorem predicts five failure modes when Level 3 regulation encounters Level 1 entities: (1) compliance theater, (2) letter-vs-spirit exploitation, (3) social enforcement failure, (4) regulatory arms race, (5) recidivism. Evidence from Volkswagen Dieselgate, BP Deepwater Horizon, EU carbon trading, and Wells Fargo’s serial violations illustrates all five predictions. Volkswagen’s defeat device was not ethical failure but optimization: save $335M engineering costs vs risk $18B fines × low detection probability. BP accumulated 760 safety violations before Deepwater Horizon while maintaining compliance programs.
The pattern is architectural failure, not implementation failure. Policy implications: environmental regulation requires redesign for optimizers, not moral agents. Effective instruments include strict liability (no intent requirement), algorithmic enforcement (P(detection) → 1), bright-line rules, and structural prohibitions. “Corporate environmental citizenship” is unachievable; regulation must assume entities that optimize, not entities that care.