Academic

Driesen on Alternatives to Regulation

By Lawrence Solum

David M. Driesen (Syracuse University - College of Law) has posted Alternatives to Regulation?: Market Mechanisms and the Environment (OXFORD HANDBOOK ON REGULATION, Martin Cave, Rob Baldwin, and Martin Lodge eds., Oxford University Press 2009) on SSRN.  Here is the abstract:

This book chapter presents a discussion of instrument choice in institutional context, with an emphasis on the Kyoto Protocol as an example of environmental benefit trading under a multilevel governance arrangement. Typically, economic models and qualitative discussion of instrument choice implicitly assume that a single regulator selects, designs, and enforces regulatory instruments. Increasingly, however, multiple polities implement regulatory instruments together. The Kyoto Protocol, for example, includes international, regional, national, sub-national, and private roles in the design and enforcement of emissions trading. This chapter emphasizes that design and enforcement are critical, as market mechanisms do not "automatically" produce environmental progress; rather they produce progress if properly designed and enforced and not otherwise.

This chapter recounts the history of market mechanisms' growth, emphasizing the contrast between the United States' success with the acid rain program and its earlier failure with bubble programs. It also discusses the use of market mechanisms around the world, with some emphasis on the intersection between ideology and instrument choice. Finally, it describes the roles of multiple institutional actors in implementing environmental benefit trading under the Kyoto Protocol and analyzes some of the challenges that arise when an instrument is implemented in a complex multi-jurisdictional setting.

Market-based alternatives to regulation sparked my initial interest in law and economics around 1970--when as a high-school sophmore, I read J. H. Dale's Pollution, Property, and Prices and was gripped by the conviction that effluent taxes and trading schmes were superior to emission control regulations.  (I will be forever grateful to Jim Krier, who was then at UCLA, for his encouragement.)  My own interests have turned elsewhere, but I continue follow this literature with interest.

Recommended!

Full post as published by Legal Theory Blog on September 22, 2008 (boomark / email).