IDEAS home Printed from https://ideas.repec.org/a/fem/femre3/2013.01-01.html
   My bibliography  Save this article

The Entry-Deterring Effects of Environmental Policy

Author

Listed:
  • Ana Espinola-Arredondo

    (School of Economic Sciences, Washington State University)

  • Felix Munoz-Garcia

    (School of Economic Sciences, Washington State University)

Abstract

This article summarizes results of a study that investigates the signaling role of environmental policy in promoting, or hindering, the ability of a monopolist to practice entry deterrence. We show that environmental policy can facilitate the incumbent firm’s concealment of information from potential entrants, thus deterring entry, and yet entailing welfare improvements. When the regulator is absent, we demonstrate that firms’ entry-deterring practices increase pollution relative to a complete information context. Hence, under certain conditions, environmental regulation becomes more beneficial in incomplete than in complete information settings. Furthermore, our results examine how this welfare benefits vary as firms become more symmetric in their production costs.

Suggested Citation

  • Ana Espinola-Arredondo & Felix Munoz-Garcia, 2013. "The Entry-Deterring Effects of Environmental Policy," Review of Environment, Energy and Economics - Re3, Fondazione Eni Enrico Mattei, January.
    • Handle: RePEc:fem:femre3:2013.01-01
    as

    Download full text from publisher

    File URL: http://re3.feem.it/getpage.aspx?id=5259
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Entry deterrence; Signaling; Emission fees; Welfare benefits.;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fem:femre3:2013.01-01. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alberto Prina Cerai (email available below). General contact details of provider: https://edirc.repec.org/data/feemmit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.