Should we enforce command and control regulations or market-oriented tools to regulate of pollution? 75 words...

Should we enforce command and control regulations or market-oriented tools to regulate of pollution? 75 words or more

Expert Solution

Command and Control Regulation (CAC) - A command and control regulation sets the limits for pollution emission or mandates certain technologies that are needed to control pollution. This regulation imposed penalties if the pollution exceeded a particular limit. As per the command control regulation firms have to bear the extra cost to install anti pollutant equipment. The Command part of the regulation states the standards that have to be adhered to, whereas the Control refers to the negative sanctions that may arise in case the commands are not taken seriously. The CAC uses three standards : The ambient standards, the emission standard and the technology standard. The CAC imposes fixed standards and thus it becomes mandatory for the firms to comply to these regulations which would then help in curbing the pollution. There are certain disadvantages here as well, in case there is a very good relationship between the regulated and the regulators, the regulators may always strive to protect the interest of the regulated firm, thus neglecting the interest of the public. If the system is too complex then the cost and expense of implementing the regulation also increases.

Market Oriented Tools- There are basically three major categories of the market oriented tools these include: Pollution charges, marketable permit and defined property rights. A pollution charge is a tax that is imposed on the quantity of pollution a firm emits. A marketable permit only allows a certain quantity of pollution. Property rights are basically legal rights that no one can infringe unless the required compensation is paid. These tools basically provide incentives to firm to reduce the pollution.

There should be an enforcement of both the command and control and market oriented tools to control and regulate pollution, The command and control will ensure the rules to reduce pollution are being adhered to, whereas the market tools would compliment this further by providing more flexibility to the firms to implement the rules and their best in the least cost possible to benefit the environment.

Rahul Sunny answered 1 year ago

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