Measures to protect the environment can distort the natural flow of trade between nations.

Question

Quizplus · Accepted Answer

When environmental regulations are imposed on businesses, it can increase the cost of production, making goods and services more expensive for consumers. This can lead to a competitive disadvantage for countries with stricter environmental policies and can distort the natural flow of trade between countries. For example, a company in a country with lax environmental regulations may have a cost advantage over a similar company in a country with strict regulations. This can lead to outsourcing of production to countries with weaker environmental policies and cause environmental harm.

Measures to Protect the Environment Can Distort the Natural Flow