When is Command-and-Control Efficient? Institutions, Technology, and the Comparative Efficiency of Alternative Regulatory Regimes For Environmental Protection

The standard account of market-based environmental protection versus command-and-control conflates nominal and relative efficiency. Standard economic accounts of command-and-control environmental regulations are insensitive to the historical, technological, and institutional contexts that can determine the comparative efficiency of alternative regulatory regimes. A regime that is nominally or relatively efficient in a given set of historical, technological, and institutional contexts may be nominally or relatively inefficient in another context. The comparative efficiencies of alternative regulatory regimes change over time, as the demand for pollution control grows and the marginal costs of pollution control change. The chapter outlines a dynamic model of environmental protection that accounts for the changing marginal costs of environmental protection over time, technological constraints, and institutions and institutional change. The technological basis of the uniform percentage source standards has been itself the monitoring device. If the approved technology was in place, and its working order documented, emission control was being accomplished.