The Entry‐Deterring Effects of Inflexible Regulation |
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Authors: | Ana Espínola‐Arredondo Félix Muñoz‐Garcia Jude Bayham |
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Institution: | School of Economic Sciences, Washington State University |
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Abstract: | This paper investigates the signalling role of tax policy in promoting, or hindering, the ability of a monopolist to practise entry deterrence. We show that environmental policy can facilitate the incumbent firm's concealment of information from potential entrants, thus deterring entry, and yet entail welfare improvements. Furthermore, we demonstrate that entry deterrence is more likely to arise when environmental regulation cannot be rapidly revised across time if market conditions change (inflexible regimes) than when regulatory agencies can adjust environmental policy over time. |
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Keywords: | D82 H23 L12 Q5 |
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