A citizen who does not purchase the product prefers regulation because she only bears the harm from the emissions, as indicat ed in(7). The valuat ion v(s+, 0+) of the citizen who purchases and is indifferent bet ween st=s and no regulation is, using(6), defined by U/1(0,0+;v(s+,0+)-U1(s Solving for vo(st, 0+) yields n工+a+10M=a(n-7+m+1(0-)1-ao+) Appendix a present s condit ions such that vo(s, 0+<i and vo(s+, 0+)>u*(st, 0+),and these conditions will be assumed to be sat isfied. Since U( is increasing in v, all cit izen with u>u(st, 0t) oppose regulation. The support for regulation is decreasing in the com- etitiveness of the indust ry and is increasing in the number N of cit izen affect ed by the externality. The support for regulation is decreasing in i, and limji-oo"=n The valuation vo(st, 0+)of the cit izen who is indifferent bet ween regulation and no regulation is increasing in s for a> l, so a higher st andard receives less support from among the purchasers of the product. The valuation v(s, 0+) of the indifferent cit izen is increas- ing in 0+ when 2(2-a-8+)ne+mN 0> (n-n+(n+1)(m-)(1-as+) in which case support for regulat ion increases as the ext emality becomes more severe. This condition is sat isfied when n is small. If the failure to regulat e the ext emality is viewed as a government failure, a news report that the ext ernality is serious may mitigate a government failure when(9)is sat isfied The support f alation also depends on the ext ent to which cit izen internalize th exte litv. The derivative dr°( (7+1)(1-a8+) ((1-as+)-(2-a-s+)0+N (10) Ifthe ext ernality is costly(0+N>0), the derivative is negative, so greater ot her-regardedness reduces the support for regulation. Support for regulation decreases because an increase in n shift s demand downward, which lessens the effect of the ext ernality. To the ext ent thatA citizen who does not purchase the product prefers regulation because she only bears the harm from the emissions, as indicated in (7). The valuation vo(s+, θ+) of the citizen who purchases and is indifferent between s+ = s and no regulation is, using (6), defined by U1(0, θ+; vo(s+, θ+)) − U1(s+, θ+; vo(s+, θ+) ≡ 0. Solving for vo(s+, θ+) yields vo(s+, θ+) = vˆ n + 1 + θ+N (n + 1)αvˆ(1 − αs+) ￾￾n − η + (n + 1)￾ η − 1 N

vˆ(1 − αs+) − (2 − α − s+)nθ+ηN
. (8) Appendix A presents conditions such that vo(s+, θ+)<vˆ and vo(s+, θ+)>v∗(s+, θ+), and these conditions will be assumed to be satisfied. Since U1(·) is increasing in v, all citizens with v>vo(s+, θ+) oppose regulation. The support for regulation is decreasing in the com￾petitiveness of the industry and is increasing in the number N of citizens affected by the externality. The support for regulation is decreasing in ˆv, and limvˆ→∞ vo vˆ = 1 n+1 . The valuation vo(s+, θ+) of the citizen who is indifferent between regulation and no regulation is increasing in s for α>1, so a higher standard receives less support from among the purchasers of the product. The valuation vo(s+, θ+) of the indifferent citizen is increas￾ing in θ+ when vˆ > 2(2 − α − s+)nθ+ηN (n − η + (n + 1)(η − 1 N ))(1 − αs+) , (9) in which case support for regulation increases as the externality becomes more severe. This condition is satisfied when η is small. If the failure to regulate the externality is viewed as a government failure, a news report that the externality is serious may mitigate a government failure when (9) is satisfied. The support for regulation also depends on the extent to which citizens internalize the externality. The derivative is dv0(θ+, s+) dη = θ+Nn α(n + 1)ˆv(1 − αs+) (ˆv(1 − αs+) − (2 − α − s+)θ+N). (10) If the externality is costly (θ+N>vˆ), the derivative is negative, so greater other-regardedness reduces the support for regulation. Support for regulation decreases because an increase in η shifts demand downward, which lessens the effect of the externality. To the extent that 15