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Command and Control Regulation

Command-and-control regulation sets specific pollution limits and mandates the use of certain pollution-control technologies. While these regulations have helped protect the environment, they provide no incentive to exceed limits, offer limited flexibility, and contain politically motivated loopholes. Command-and-control regulation has three main shortcomings: 1) no incentive to exceed standards, 2) inflexibility in applying one standard to all, and 3) susceptibility to political compromises and exemptions.

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166 views

Command and Control Regulation

Command-and-control regulation sets specific pollution limits and mandates the use of certain pollution-control technologies. While these regulations have helped protect the environment, they provide no incentive to exceed limits, offer limited flexibility, and contain politically motivated loopholes. Command-and-control regulation has three main shortcomings: 1) no incentive to exceed standards, 2) inflexibility in applying one standard to all, and 3) susceptibility to political compromises and exemptions.

Uploaded by

Ardiansyah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Command-and-control regulation

Key points
Command-and-control regulation sets specific limits for pollution emissions and/or
mandates that specific pollution-control technologies that must be used.
Although such regulations have helped to protect the environment, they have three
shortcomings: they provide no incentive for going beyond the limits they set; they offer
limited flexibility on where and how to reduce pollution; and they often have politically-
motivated loopholes.

Command-and-control regulation
When the United States started passing comprehensive environmental laws in the late 1960s and
early 1970s, a typical law specified how much pollution could be emitted out of a smokestack or
a drainpipe. These laws also imposed penalties if pollution limits were exceeded. Other laws
required the installation of certain equipmentfor example, on automobile tailpipes or on
smokestacksto reduce pollution.
Both laws that specify allowable quantities of pollution and laws that detail which pollution-
control technologies must be used fall under the category of command-and-control regulation. In
effect, command-and-control regulation requires that firms increase their costs by installing anti-
pollution equipment; firms are thus required to take the social costs of pollution into account.
Command-and-control regulation has been highly successful in protecting and cleaning up the
US environment. In 1970, the Environmental Protection Agency was created to oversee all
environmental laws. In the same year, the Clean Air Act was enacted to address air pollution.
Just two years later, in 1972, Congress passed and the president signed the far-reaching Clean
Water Act. These command-and-control environmental laws, and their amendments and updates,
have been largely responsible for cleaner air and water in the United States in recent decades.
However, economists have pointed out three difficulties with command-and-control
environmental regulation.
First, command-and-control regulation offers no incentive to improve the quality of the
environment beyond the standard set by a particular law. Once the command-and-control
regulation has been satisfied, polluters have zero incentive to do better.
Second, command-and-control regulation is inflexible. It usually requires the same standard for
all polluters, and often the same pollution-control technology as well. This means that command-
and-control regulation draws no distinctions between firms that would find it easy and
inexpensive to meet the pollution standardor to reduce pollution even furtherand firms that
might find it difficult and costly to meet the standard. Firms have no reason to rethink their
production methods in fundamental ways that might reduce pollution even more and at lower
cost.
Third, command-and-control regulations are written by legislators and the Environmental
Protection Agency, so they are subject to compromises in the political process. Existing firms
often argueand lobbythat stricter environmental standards should not apply to them, only to
new firms that wish to start production. Consequently, real-world environmental laws are full of
fine print, loopholes, and exceptions.
Critics of command-and-control regulation understand the goal of reducing pollution, but they
question whether this type of regulation is the best way to design policy tools for accomplishing
that goal.

Self-check question
Consider two approaches to reducing emissions of CO2 into the environment from
manufacturing industries in the United States. In the first approach, the US government makes it
a policy to use only predetermined technologies. In the second approach, the US government
determines which technologies are cleaner and subsidizes their use. Of the two approaches,
which is the command-and-control policy?
[Hide solution.]
The first policy is command-and-control because it is a requirement that applies to all producers.

Review questions
What is command-and-control environmental regulation?
What are the three problems that economists have noted with regard to command-and-
control regulation?

Critical-thinking questions
Would environmentalists favor command-and-control policies as a way to reduce
pollution? Why or why not?
Consider two ways of protecting elephants from poachers in South Africa. In one
approach, the government sets up enormous national parks that have sufficient habitat for
elephants to thrive and forbids all local people from entering the parks or injuring either
the elephants or their habitat in any way. In a second approach, the government sets up
national parks and designates 10 villages around the edges of the park as official tourist
centers that become places where tourists can stay and embark on guided tours inside the
national park. Consider the different incentives to local villagerswho often are living in
povertyin each of these plans. Which plan seems more likely to help the elephant
population?

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