Command-and-Control Policy

Abstract

This chapter provides insights into relevant features of command-andcontrol policies in an environmental context. The first section refers to environmental standards, which replace the generally unknown efficient levels of certain environmental commodities. The necessity to choose appropriate standards contributes substantially towards environmental policy developing into a separate policy area, competing with economic policy, labor market policy and others for financial and public support. The US Clean Air Act (CAA) and the German Federal Immission Control Act (BImSchG) will help to analyze the concept of ecological efficiency. Thereafter, framework conditions, mostly for stimulating consumers and motivating private business companies to engage in environmental activities, will be investigated. The Private Finance Initiative (PFI) applied to environmental policy characterizes the orientation of this section. The incentive compatibility of commands and framework conditions will be addressed by means of the refillables quota issue. In addition, standards and framework conditions should be economically feasible or economically reasonable. This concept appears in a variety of legal papers, acts and ordinances related to environmental policy. What does it mean and what are its implications from an economic point of view?