On Explaining the Development of ‘Emissions Trading’ in U.S. Air Pollution Regulation

Abstract

Given the Clean Air Act’s traditional structure of categorical emissions rules implemented through detailed administrative procedures, the rise of market mechanisms is a significant development that may indicate a fundamental shift in modern regulation. A key force in the market mechanism process has been the development and spread of a particular form of regulatory culture which emphasizes, among other things, that the content and legitimacy of regulatory policies should be based as much as possible on the interests and compromises of private parties.

This paper attempts to explain the widespread adoption of “market mechanisms” in U.S. air pollution regulation. While the “market mechanism” movement might be a desirable development for purposes of implementing agreed upon pollution control goals, it also raises two significant problems – an implied severe limitation for the practice of politics, and an obscuring of the distributional implications of policy choices.

Keywords: Air Pollution Regulation, Regulatory Culture, Market Mechanisms, Clean Air Act, Public Policy Programs, Framework, Traditional Regulation