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In this article, Washington State University researchers Ana Espinola-Arredondo  and Felix Munoz-Garcia show that, under incomplete information contexts, firms’ entry-deterring practices increase pollution, thus enlarging the welfare benefits from implementing environmental policy. Their results, in addition, identify under which cases an under- or over-estimation of the welfare benefits of environmental regulation arises from ignoring the incomplete information context in which firms interact.

Review of Environment, Energy and Economics