Skip to main content
    • Aa
    • Aa

Why do firms oppose entry-deterring policies? Environmental regulation and entry deterrence

  • Ana Espínola-Arredondo (a1) and Félix Muñoz-García (a2)

This paper investigates the design of environmental regulation under different regimes: flexible and inflexible policies. We analyze under which settings strict emission fees can be used as an entry-deterring tool, and become socially optimal. Furthermore, we demonstrate that the incentives of the social planner and the incumbent firm are aligned regarding policy regimes ifentry can be easily deterred by setting a stringent regulation. Their incentives, however, can bemisaligned when entry becomes more costly to deter, leading the incumbent to actually preferenvironmental policies that attract entry.

Linked references
Hide All

This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

J. Bain (1956), Barriers to New Competition, Cambridge, MA: Harvard University Press.

W. Brock and D. Evans (1985), ‘The economics of regulatory tiering’, RAND Journal of Economics 16(3): 398409.

T. Dean , R. Brown , and V. Stango (2000), ‘Environmental regulation as a barrier to the formation of small manufacturing establishments: a longitudinal examination’, Journal of Environmental Economics and Management 40(1): 5675.

A. Espinola-Arredondo and F. Munoz-Garcia (2013), ‘When does environmental regulation facilitate entry-deterring practices’, Journal of Environmental Economics and Management 65(1): 133152.

Y.H. Farzin (2003), ‘The effects of emission standards on industry’, Journal of Regulatory Economics 24: 315327.

E. Helland and M. Matsuno (2003), ‘Pollution abatement as a barrier to entry’, Journal of Regulatory Economics 24(2): 243259.

D. Kovenoch and S. Roy (2005), ‘Free-riding in non-cooperative entry deterrence with differentiated products’, Southern Economic Journal 72: 119137.

K. Kuhn and X. Vives (1999), ‘Excess entry, vertical integration, and welfare’, RAND Journal of Economics 30(4): 575603.

G. Mankiw and M. Whinston (1986), ‘Free entry and social inefficiency’, RAND Journal of Economics 17(1): 4858.

M.E. Porter (1991), ‘America's green strategy’, Scientific American 264(4): 168.

M.E. Porter and C. van der Linde (1995b), ‘Toward a new conception of the environment–competitiveness relationship’, Journal of Economic Perspectives 9(4): 97118.

L. Schoonbeek and F.P. de Vries (2009), ‘Environmental taxes and industry monopolization’, Journal of Regulatory Economics 36: 94106.

Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Environment and Development Economics
  • ISSN: 1355-770X
  • EISSN: 1469-4395
  • URL: /core/journals/environment-and-development-economics
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Full text views

Total number of HTML views: 2
Total number of PDF views: 29 *
Loading metrics...

Abstract views

Total abstract views: 186 *
Loading metrics...

* Views captured on Cambridge Core between September 2016 - 23rd September 2017. This data will be updated every 24 hours.