Question

Would environmentalists favor command-and-control policies over market orientated policies reduce pollution? Why or why not?

Answer 1

United States(US) started comprehensive environmental laws in the late 1960s. Governments have traditionally employed Command-and-control regulations in the 1970s and 1980s. There are three types of environmental quality standards:

1. ambient
2. emission
3. technology.

*Command-and-control environmental reduce the pollution that emitted in the economy by firms. It makes firms to install anti-pollution equipment which reduce the pollution produced by the production which means the firms have to factor the social costs also in their production costs. Environmentalist does not allow to put a dollar value on pollution and it does not allow firms to pay money and keep spreading pollution which according to environmentalist is an ecological crime. It appears to foster the development of cultures of resistance and a minimalistic approach to compliance among regulated entities. It reducing emissions of CO2 into the environment from manufacturing industrieS. It's principle of setting standards and imposing sanctions to regulate exploitation of environment and natural resources. It directly put restraints on pollution, but limitations of incentive it offers polluters to comply with environment standards.

->It is like a ''one in all" approach that does not categorically consider varying performance of polluters, thus ignoring efficiency principle. This constraint, thus, poses other policy alternatives for environmental management.

*Market-oriented environmental policies create incentives to allow firms some flexibility in reducing pollution. There are three main categories of market-oriented approaches to pollution control are

• pollution charges
• marketable permits
• better-defined property rights

Market-oriented policies(increase the aggregate supply)

It is based on the idea that free markets, working under competitive conditions. A pollution charge is a tax imposed on the quantity of pollution that a firm emits. By decrease of pollution the cost of price increases but additional reductions in pollution become more expensive.

pollution(decreases) = cost of price(increases)

marginal cost (decreases) = emissions(decreases) CO2

• It has the negative environmental externalities of production, consumption and common access resources.

--> failure to provide public goods

--> abuse of monopoly power

--> information asymmetries

• The development of a dual economy
• Failure of firms to be set up and to contribute to growth
• Income distribution

--> in connection with market-based supply-side policies

--> in connection with the effects of trade and market liberalisation.

• No improve of export performance and greater economic growth and development in some countries.