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Chapter 12: Problem 5

Consider two approaches to reducing emissions of \(\mathrm{CO}_{2}\) into the environment from manufacturing industries in the United States. In the first approach, the U.S. government makes it a policy to use only predetermined technologies. In the second approach, the U.S. government determines which technologies are cleaner and subsidizes their use. Of the two approaches, which is the command-and-control policy?

Short Answer

Expert verified
The command-and-control policy is approach 1, where the U.S. government directly regulates the manufacturing industry by requiring the use of predetermined technologies to reduce CO2 emissions, without market-based incentives.

Step by step solution

01

Approach 1: Predetermined Technologies

In the first approach, the U.S. government mandates the use of predetermined technologies in the manufacturing industry to reduce CO2 emissions. This means that the government directly controls the types of technology that must be used by the industry, without any market-based incentive.
02

Approach 2: Cleaner Technologies Subsidies

In the second approach, the U.S. government determines which technologies are cleaner and provides subsidies to encourage their use by the manufacturing industry. This approach uses financial incentives to promote cleaner technologies rather than establishing regulations that require their use.
03

Comparing the two approaches

Comparing the two approaches, approach 1 involves the direct regulation of the manufacturing industry by requiring the use of predetermined technologies. In contrast, approach 2 provides financial incentives to encourage the use of cleaner technologies but does not directly regulate the industry.
04

Identifying the command-and-control policy

Based on the comparison, we can see that approach 1 aligns with the definition of a command-and-control policy. The government directly regulates the industry by mandating the use of specific technologies to reduce emissions, without market-based incentives. Therefore, approach 1 is the command-and-control policy.

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Most popular questions from this chapter

An emissions tax on a quantity of emissions from a firm is not a command-and- control approach to reducing pollution. Why?

The rows in Table 12.7 show three market-oriented tools for reducing pollution. The columns of the table show three complaints about command-and- control regulation. Fill in the table by stating briefly how each market- oriented tool addresses each of the three concerns. $$\begin{array}{l|lcc}\hline & \begin{array}{l}\text { Incentives to } \\\\\text { Go Beyond }\end{array} & \begin{array}{c} \text { Flexibility about Where and How } \\\\\text { Pollution Will Be Reduced }\end{array} & \begin{array}{c}\text {Political Process Creates } \\\\\text { Loopholes and Exceptions }\end{array} \\\\\hline \begin{array}{l}\text { Pollution } \\\\\text { Charges }\end{array} & & \\\\\hline \begin{array}{l}\text { Marketable } \\\\\text { Permits }\end{array} & & \\\\\hline\begin{array}{l}\text { Property } \\\\\text { Rights }\end{array} & & \\\\\hline\end{array}$$

From an economic perspective, is it sound policy to pursue a goal of zero pollution? Why or why not?

In the Land of Purity, there is only one form of pollution, called "gunk." Table 12.14 shows possible combinations of economic output and reduction of gunk, depending on what kinds of environmental regulations you choose. $$\begin{array}{l|l|l} \hline \text { Combos } & \text { Eco Output } & \text { Gunk Cleaned Up } \\ \hline \mathrm{J} & 800 & 10 \% \\ \hline \mathrm{K} & 500 & 30 \% \\ \hline \mathrm{L} & 600 & 40 \% \\ \hline \mathrm{M} & 400 & 40 \% \\ \hline \mathrm{N} & 100 & 90 \% \\ \hline \end{array}$$ a. Sketch a graph of a production possibility frontier with environmental quality on the horizontal axis, measured by the percentage reduction of gunk, and with the quantity of economic output on the vertical axis. b. Which choices display productive efficiency? How can you tell? c. Which choices show allocative efficiency? How can you tell? d. In the choice between \(K\) and \(L\), can you say which one is better and why? e. In the choice between \(K\) and \(N,\) can you say which one is better, and why? f. If you had to guess, which choice would you think is more likely to represent a command-andcontrol environmental policy and which choice is more likely to represent a market-oriented environmental policy, choice L or M? Why?

What is the difference between private costs and social costs?
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