Determination of optimal air quality standard: Quantities or prices? Archives of Economic History XIV(2): 61-82, 2002
Determination of optimal air quality standard: Quantities or prices? Archives of Economic History XIV(2): 61-82 (EconLit Listed). (2002).
In this study, a basic comparison between the Pigouvian and the Coasean approaches is carried out in order to discuss and comment on the mechanisms by which externalities are resolved. Environmental control approaches are examined and compared in terms of minimization of abatement costs, development of new technologies, revenue-generating capacity, complexity, popularity, incentives to cheat and inflation and adjustment costs. It seems that economic instruments have several advantages over regulations: they are less rigid and static, they are cost-effective, provide a source of finance, and encourage innovation. However, market mechanisms do not invalidate regulatory approaches; they are, and must be, an adjunct to them.
JEL Classification: Renewable-Resources-and-Conservation; Environmental-Management-Government-Policy (Q280); Abatement-; Air-Quality; Renewable-Resources-and-Conservation; Environmental-Management-Water (Q250)