Strict Environmental Regulation Can Assist Industries to Achieve Competitiveness. Would You Argue Against or Support This Statement and How Would You Do so?

Topics: Capitalism, Monopoly, Pollution Pages: 2 (678 words) Published: March 17, 2013
Strict Environmental Regulation can assist industries to achieve competitiveness. Would you argue against or support this statement and how would you do so? Competition and environmental regulation are compulsory. Both environmental regulation and competitiveness policies are two of the highest policies that are taken into great consideration. They both aim to prevent market failures and enhance social welfare (“Environmental Regulation and Competition” 2007). The purpose of this essay is to find out whether strict environmental regulation can assist industries to achieve competitiveness followed with arguments in favour of or against. The main aim of strict environmental regulation is to correct environmental damages while the aim of competition policy is to prevent distortions due to the exploitation and misuse of market power. Environmental regulations can constitute some form of barriers to entry in certain markets. It actually provides a predatory behavior in certain markets which are harmful to competition (“Environmental Regulation and Competition” 2007). Strict environmental regulation usually results in a price rise to consumers by reducing competition in the market. Strict environmental regulation can however reduce competition in a market through various channels like mention above by raising price they make it difficult for other firms to enter the market and compete and thus such regulation increases concentration on the part of firms (“Environmental Regulation and Competition” 2007). Strict environmental regulation also leads to innovation industries try to find new ways to differentiate them from other industries and thus increasing its competitiveness. The form of environmental regulation used includes eco-taxation, emissions trading and pollution charges (Brueckner 2010, 85). Eco-taxes are also known as green taxes. This form of policy has been introduced in various countries. Emission trading is a market-based scheme that enables the polluters...
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