The paper "Environmental and Natural Resource Economics" is a good example of a macro & microeconomics essay. Prevention of environmental pollution from industries has been a challenge to various countries. This is because most large emissions are attributed to the industries. As a result, it calls for the reduction of emissions from the industries in an efficient and cost-effective way. This article assesses the strengths and weaknesses of conventional command and control regulations and economic instruments (emissions trading) in the regulation of industrial pollution. Conventional command and control regulation According to McManus (2009), conventional command and control regulation involves direct regulation of the industry by legislation which states what is illegal and what is permitted.
The command represents the quality of targets or standards by that the company has to comply as directed by the government authority. Control represents the negative sanctions that may lead to non-compliance such as prosecution (Baldwin, Cave, & Lodge, 2011). The conventional command and control enforcement involves the application of uniform sanctions. The deliverance of its objectives requires the highest possible level of compliance which can be achieved through appropriate enforcement and implementation.
It is worth noting that due to its application of uniform sanctions, the small companies feel its burden more severely as compared to large size companies (Abbot, 2009). Strengths According to Gruber (2005), conventional command and control regulation are usually preferred in cases where there is a highly toxic pollutant such as the concern of the impact of toxicity outweighs any concern on economic efficiency. It is also effective where marginal cost curves abatements are uniform in all the companies where that the industry is regulated.
As a result of this, it will be easier for the government to easily know the abatement curve. It is also preferred when the initial reduction in regard to the number of pollutants will lead to significant benefits to the society, while the continued reduction will not be in a condition of providing many benefits. In this case, the marginal benefit of reduction is said to be highly inelastic.
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