Environmental Regulation Cost and Industry Structure Changes

Diana M. Burton, Irma A. Gomez and H. Alan Love


Nonstationary Markov analyses are used to investigate impacts of environmental regulatory costs associated with compliance on changes in market structure in pulp and paper industries. Results show environmental regulation expenditures have statistically significant effects on the probabilities of capacity moving to a larger company-size category, so industry structure is affected by environmental regulation. However, counter to expectations, results further show consolidation occurs with higher probability when environmental costs are falling rather than when they are rising. Policy analyses that presume immediate policy responses to cost changes or that industry structure is unchanged may yield time-inconsistent policy conclusions. (JEL D21, Q28)

This article requires a subscription to view the full text. If you have a subscription you may use the login form below to view the article. Access to this article can also be purchased.

Purchase access

You may purchase access to this article. This will require you to create an account if you don't already have one.