Marc St-Pierre and Aaron Elrod recently published an article titled “The Perverse Effect of Environmental Regulation on Emissions: The Role of Product-Mix Changes” in Journal of Public Economic Theory. The authors construct a theoretical framework for understanding the relationship between environmental regulation and product mix, which is currently lacking in the literature. They then use this framework to identify general cases in which environmental regulation leads to an increase in emissions. Their findings provide practical policy implications for environmental regulatory agencies.
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