Question

Classify the following pollution-control policies as command-and-control or market incentive-based.

a. A state emissions tax on the quantity of carbon emitted by each firm.

b. The federal government requires domestic auto companies to improve car emissions by 2020.

c. The EPA sets national standards for water quality.

d. A city sells permits to firms that allow them to emit a specified quantity of pollution.

e. The federal government pays fishermen to preserve salmon.

Short answer

(a) Market incentive based

(b) Command and control based.

(c) Command and control based.

(d) Market incentive based

(e) Market incentive based

Step-by-step solution

 Command and control policy :

The enforced environmental policy is directed by command-and-control policy. It depicts a certain form of regulation.

(a) Explanation :

(a) Emission taxes are incentive-based because they allow companies to choose whether to produce pollutants and pay additional taxes or to restrict emissions and save money on taxes.

(b) Explanation : 

(b). If the automobile firms refuse to comply, the government will simply prohibit them from selling in non-regulated markets. They must adhere to government policies.

(c) Explanation : 

(c). If the industries do not meet with the EPA's water quality criteria, they will be phased out of the market.

(d) Explanation : 

(d). When the city allows businesses to sell a particular number of goods in the market while adhering to certain emission standards, this is an example of a market-oriented strategy since it gives businesses the freedom to make their own decisions.

(e) Explanation :

(e). Fishermen get incentives from the government to conserve salmon, which is a type of market incentive scheme for salmon protection.