Firms cannot sustain losses forever. When they leave the industry, importers can “take over,” raising

prices to monopoly levels to cover their short-term losses and earn long-term profits.

10. Because low-income countries need to provide necessities—food, clothing, and shelter—to their people. In

other words, they consider environmental quality a luxury.

11. Low-income countries can compete for jobs by reducing their environmental standards to attract

business to their countries. This could lead to a competitive reduction in regulations, which would lead to

greater environmental damage. While pollution management is a cost for businesses, it is tiny relative to

other costs, like labor and adequate infrastructure. It is also costly for firms to locate far away from their

customers, which many low-income countries are.

12. The decision should not be arbitrary or unnecessarily discriminatory. It should treat foreign companies
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