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Techniques of Pollution Control

There are many different ways to address pollution, which makes the job of the policy maker and regulator that much more difficult. All of the following regulatory schemes have an economic impact, creating some dead-weight loss as they seek to incorporate external costs into the market. How much dead-weight loss occurs depends on the many things:the type of regulation, the nature of the pollutant, the layout of the regulated industry, and the size and characteristics of the polluted region. All of these techniques also have varying information and enforcement costs associated with them as well. As they are just rules that aren't self-enforcing, the regulatory agency must incur some costs for monitoring compliance with the regulation and fining non-compliers.These information and administrative costs also depend on many of the same factors listed above.  As you can see, a lot goes into choosing which regulatory design to use. Below are the options facing those who decide which regulation is most appropriate.


Voluntary Control/Self-Regulation

Traditional Methods 

Cap-and-Trade Markets 

Green Taxes

Green or Eco-taxes are environmentally motivated taxes levied on producers and consumers so the negative externality caused by pollution is internalized by those responsible and accounted for in the market. They are commonly known as sin taxes, and when applied to such "sins" as polluting the air they are called green or eco-taxes.


Source: Hanley, Nick, Jason F. Shogren, and Ben White. Introduction to Environmental Economics. 2001. Oxford University Press, NYC.

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