Question

Both command-and-control and market oriented solutions have been used to address the pollution problem. What are the weaknesses or drawbacks of each approach?

Answer 1

Problems with command-and-control

First, the regulation of command and control does not provide any motivation to increase the quality of the system above the level set by a particular statute. When the restriction on command-and-control is met, polluters have zero opportunities to do better.

Second, regulating command-and-control is inflexible. It typically needs the same level for all polluters, and also the same equipment for reducing emissions. This means that command-and-control regulation draws no distinctions between firms that would find it easy and inexpensive to meet the pollution standard—or to reduce pollution even further—and firms that might find it difficult and costly to meet the standard. There is no need for businesses to reconsider their manufacturing practices in fundamental ways that could minimize emissions much further and at a lower cost.

Third, policymakers and the Environmental Protection Agency draft command-and-control rules, and they are subject to compromise in the legislative process. Established companies also argue — and lobby — that they should not be subject to tighter environmental regulations, only to new firms wishing to start production. Real-world environmental regulations are also replete with fine printing, loopholes and exceptions.

Problems with market oriented solutions

There is a marked gap in the understanding of biophysical limits in market-based methods as regards limitations. It is to be anticipated, however, as market-based environmental policies are clearly (somewhat) pro-business and see capital growth as the primary target with environmental issues regarded as secondary to that aim. Finally, market-based policies frequently ignore the power's position in shaping it. It implies that while its purpose is admirable, it still favors those who can not afford to pay for the carbon offsets and drawbacks.