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Environmental Regulation Cost and Industry Structure Changes

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  • Diana M. Burton
  • Irma A. Gomez
  • H. Alan Love

Abstract

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.

Suggested Citation

  • Diana M. Burton & Irma A. Gomez & H. Alan Love, 2011. "Environmental Regulation Cost and Industry Structure Changes," Land Economics, University of Wisconsin Press, vol. 87(3), pages 545-557.
    • Handle: RePEc:uwp:landec:v:87:y:2011:iii:1:p:545-557
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    References listed on IDEAS

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    Cited by:

    1. Liu, Shaohui & Liu, Chuanjiang & Yang, Mian, 2021. "The effects of national environmental information disclosure program on the upgradation of regional industrial structure: Evidence from 286 prefecture-level cities in China," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 552-561.
    2. Lingming Chen & Wenzhong Ye & Congjia Huo & Kieran James, 2020. "Environmental Regulations, the Industrial Structure, and High-Quality Regional Economic Development: Evidence from China," Land, MDPI, vol. 9(12), pages 1-22, December.
    3. Ziyang Chen & Xiao Feng & Ziwen He, 2022. "A Key to Stimulate Green Technology Innovation in China: The Expansion of High-Speed Railways," IJERPH, MDPI, vol. 20(1), pages 1-21, December.
    4. Li, Changsheng & Qi, Yaping & Liu, Shaohui & Wang, Xu, 2022. "Do carbon ETS pilots improve cities' green total factor productivity? Evidence from a quasi-natural experiment in China," Energy Economics, Elsevier, vol. 108(C).
    5. Hanxiao Wei & Huiqin Yao, 2022. "Environmental Regulation, Roundabout Production, and Industrial Structure Transformation and Upgrading: Evidence from China," Sustainability, MDPI, vol. 14(7), pages 1-17, March.
    6. Chun Lin & Gengrui Cui & Yingjie Sun, 2023. "Labor allocation: How environmental regulation promotes industrial structure," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 1995-2003, June.
    7. Ye Tian & Qian Wan & Yao Tan, 2022. "Exploration on Inter-Relation of Environmental Regulation, Economic Structure, and Economic Growth: Provincial Evidence from China," Sustainability, MDPI, vol. 15(1), pages 1-23, December.
    8. Zhaohui Chong & Chenglin Qin & Xinyue Ye, 2017. "Environmental Regulation and Industrial Structure Change in China: Integrating Spatial and Social Network Analysis," Sustainability, MDPI, vol. 9(8), pages 1-16, August.

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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