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Applied and bridge studies study record
Environment, climate & resourcesThe Substitution Trap Law: Why Regulated Industries Innovate Around Constraints Without Reducing Harm
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
Provides a general theorem and game-change solution for a recurring regulatory failure mode.
WHAT'S NEW · Proves Substitution Trap as a dynamic extension of MST; formalizes demand persistence and welfare degradation axioms.
The Substitution Trap is a regulatory failure mode where restricting supply of a harmful product without addressing demand leads to substitution to even more dangerous alternatives. The paper establishes the theorem within the Missing System Theory framework and calibrates it across opioids, PFAS, tax evasion, antimicrobial resistance, and agricultural monoculture, showing that supply restriction alone systematically worsens welfare. The escape requires demand-side interventions like welfare-cost pricing and conflictoring.