Frameworks for Analyzing the Effects of Risk and Environmental Regulations on Productivity
Viscusi, W. Kip
:
1983
Abstract
The existence of a negative relationship between the regulatory burden and capital
investments, and consequently productivity,is not controversial. A conventional model of
this type is developed in Section I. If, however, these regulations change over time and
firms' investment decisions are irreversible, there will be additional distortions, as shown in Section II. In Section III, I show that uncertainty regarding these regulatory
changes exacerbates the adverse productivity effects even for risk-neutral firms.
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