Question

for each policy listed, identify whether it is a command-and-control policy (regulation), tradable permit system, corrective subsidy, or corrective tax.

Answer 1

Pollution-control policies are classified as command-and-control or market incentive based. Policies a, d, and e (emissions tax, tradable permits, and corrective subsidy for fishermen) are market incentive based, while policies b and c (auto emissions improvements and EPA water quality standards) are command-and-control.

Step-by-step explanation:

When classifying pollution-control policies, they can be categorized as either command-and-control policies (regulations) or market incentive based policies. Here's how each policy listed can be classified:

• a. A state emissions tax on the quantity of carbon emitted by each firm is a corrective tax, making it market incentive based.
• b. The federal government requires domestic auto companies to improve car emissions by 2020. This is a regulation and can be classified as command-and-control.
• c. The EPA sets national standards for water quality, which is also a type of regulation, so it's classified as command-and-control.
• d. A city sells permits to firms that allow them to emit a specified quantity of pollution. This is a tradable permit system and is market incentive based.
• e. The federal government pays fishermen to preserve salmon, which is a corrective subsidy and thus market incentive based.

Answer 2

Pollution-control policies can be either command-and-control or market incentive based. A state emissions tax and the sale of pollution permits are market-based mechanisms, whereas direct regulations by the government or an agency are command-and-control.

Step-by-step explanation:

When classifying pollution-control policies, we categorize them as either command-and-control or market incentive based. In the list provided:

• a. A state emissions tax on the quantity of carbon emitted by each firm is an example of a corrective tax, which is a market incentive based approach.
• b. The requirement for domestic auto companies to improve car emissions by 2020 falls under command-and-control regulation.
• c. The EPA setting national standards for water quality is also a command-and-control policy.
• d. A city selling permits for pollution emission is a tradable permit system, which is market incentive based.
• e. The federal government paying fishermen to preserve salmon represents a corrective subsidy, a market incentive based method.

Regarding complaints about command-and-control regulations, market-oriented tools address concerns like cost-effectiveness, innovation encouragement, and flexibility.

For instance, corrective taxes and subsidies provide financial incentives to reduce pollution, while tradable permits allow firms the flexibility to buy or sell the right to pollute, thus harnessing market forces to achieve environmental goals.