Foundations and Trends® in Microeconomics > Vol 1 > Issue 4

Market-based Approaches to Environmental Regulation

Ted Gayer, Georgetown University, USA, gayert@georgetown.edu John K. Horowitz, Department of Agricultural and Resource Economics, 2104 Symons Hall, University of Maryland, USA, jhorowitz@arec.umd.edu
 
Suggested Citation
Ted Gayer and John K. Horowitz (2006), "Market-based Approaches to Environmental Regulation", Foundations and Trends® in Microeconomics: Vol. 1: No. 4, pp 201-326. http://dx.doi.org/10.1561/0700000013

Published: 22 Aug 2006
© 2006 T. Gayer and J.K. Horowitz
 
Subjects
Environmental Economics
 

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In this article:
1 Introduction
2 Environmental Regulation and the Case for Market Mechanisms
3 Issues in the Design of Market Instruments
4 Policies in Practice
5 Conclusions
Acknowledgements
References

Abstract

Economists argue that policymakers should take advantage of market principles in designing environmental regulations. Such market-based approaches – environmental taxes and cap-and-trade – use economic incentives to achieve environmental goals at lower costs. Market-based approaches have now become common due to near-unanimous advocacy by economists and early positive policy experiences. Despite this acceptance, policymakers have often merged market-based incentives onto existing non-market approaches resulting in a set of mixed policies whose economic properties are often difficult to unravel. Thus, even the most prominent market-based regulations contain many non-market elements. The authors review the economics literature on the rationale for and optimal design of environmental taxes and cap-and-trade systems. They then discuss the structure and economics of the major U.S. market-based policies.

DOI:10.1561/0700000013
ISBN: 978-1-933019-37-6
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ISBN: 978-1-933019-84-0
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Table of contents:
1 Introduction
2 Environmental Regulation and the Case for Market Mechanisms
3 Issues in the Design of Market Instruments
4 Policies in Practice
5 Conclusions

Market-based Approaches to Environmental Regulation

Market-based Approaches to Environmental Regulation reviews the economics literature of market-based environmental regulations and design issues for environmental taxes and cap-and-trade systems. It begins by reviewing the economics literature on the theory of market-based environmental regulations. It then goes on to cover design issues for environmental taxes and cap-and-trade systems. Market-based Approaches to Environmental Regulation also discusses the U.S. experience with a number of regulatory approaches that are commonly characterized as market-based and describes the mix of market and non-market instruments that characterize these policies. Market-based Approaches to Environmental Regulation will be of interest to all researchers and practitioners in the field of environmental regulation.

 
MIC-013