2 - Explaining Public Interventions in Private Governance

Summary

The chapter develops a theory of public intervention in private governance. It examines the conditions under which a public authority will intervene and the form this intervention will take: standards and/or procedural regulations or the absence of intervention. The chapter explains that the type of public intervention depends on the interplay of two variables: the domestic benefits of product differentiation and the fragmentation of the private governance market. On the one hand, a pubic authority may intervene in the market for sustainably certified goods to improve the competitive position of domestic producers, who are the main rule targets of private governance schemes. On the other hand, a public authority can intervene to structure a fragmented private governance market in order to overcome problems such as supply chain confusion, a lack of credibility of existing private governance schemes, and trade and competitive distortions. The chapter further conceptualizes private governance schemes as interest groups that engage in lobbying. It also explains the dynamics of the theory in the context of the EU policymaking process and how the interventions may evolve over time.