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Achieving the desired air quality standards and emission of greenhouse gases (or even particulate matter and sulphur oxides) requires enforcement of emission standards through an appropriate regulatory framework

Marketing Dec 28, 2020

Achieving the desired air quality standards and emission of greenhouse gases (or even particulate matter and sulphur oxides) requires enforcement of emission standards through an appropriate regulatory framework. Regulatory agencies such as EPA may enforce them for stationary sources of pollution (emissions) and/or mobile sources like automobiles, mass transit, buses, trucks, and ships. These "command and control" methods require businesses to take necessary pollution abatement actions. The emission control standards imposed may become increasingly tighter with time to facilitate continued improvements in air quality.

Would you advocate a direct "command and control" approach, or prefer to use other economic policy instruments to achieve those same emission levels? Or combine both? Please explain reasons for your choice.

Expert Solution

While command and control policies can be fairly effective there are other economic tools that could be used for better outcomes in air quality. One of which, a revenue-neutral carbon tax, is perhaps the best suited in limiting carbon emissions. A revenue-neutral carbon tax would be a tax on carbon dioxide pollution, which would raise the price of things like gasoline. The revenue of this new tax would then be returned to taxpayers when refunds are returned. Through this strategy, taxpayers are not losing any money, air quality will rise, consumption of fossil fuels will decrease, and the market failure of pollution is accounted for. This is overall the best economic strategy.

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