Efficacy of Command-and-Control and Market-Based Environmental Regulation in Developing Countries

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Date: Annual 2018
Publisher: Annual Reviews, Inc.
Document Type: Article
Length: 221 words

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Byline: Allen Blackman, Inter-American Development Bank, Climate and Sustainable Development Sector, Washington, DC 20005, USA; email: allenb@iadb.org; Zhengyan Li, Indiana University School of Public and Environmental Affairs, Bloomington, Indiana 47405, USA; email: zl31@umail.iu.edu, aaliu@indiana.edu; Antung A. Liu, Indiana University School of Public and Environmental Affairs, Bloomington, Indiana 47405, USA; email: zl31@umail.iu.edu, aaliu@indiana.edu Keywords: command-and-control, market-based instruments, developing country Author Notes: Corresponding author JEL codes: O13, O18, Q01, Q53, Q56 Abstract Like their counterparts in industrialized countries, environmental regulators in developing countries rely principally on two types of instruments: command-and-control (CAC) policies, such as emissions and technology standards, and to a lesser extent, market-based instruments (MBIs), such as emissions fees and tradable permits. But these regulators often lack the capacity to implement, monitor, and enforce CAC and MBI policies. As a result, the efficacy of those policies is an empirical matter. We review emerging experimental and quasi-experimental evidence on CAC and MBI policies in developing countries, specifically, from 32 studies of CAC policies and 8 studies of MBIs. Although drawn from a small and decidedly nonrandom sample of countries and policy types, the evidence clearly indicates that CAC and MBI policies can have significant environmental benefits in developing countries. In addition to cataloging and reviewing this evidence, we discuss data and methodological challenges to augmenting it and suggest directions for future research.

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Gale Document Number: GALE|A557026044