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

Posted: 29 Oct 2018

See all articles by Allen Blackman

Allen Blackman

Inter-American Development Bank (IDB)

Zhengyan Li

Indiana University Bloomington

Antung Liu

Indiana University - School of Public and Environmental Affairs

Date Written: October 2018

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.

Suggested Citation

Blackman, Allen and Li, Zhengyan and Liu, Antung, Efficacy of Command-and-Control and Market-Based Environmental Regulation in Developing Countries (October 2018). Annual Review of Resource Economics, Vol. 10, Issue 1, pp. 381-404, 2018. Available at SSRN: https://ssrn.com/abstract=3274152 or http://dx.doi.org/10.1146/annurev-resource-100517-023144

Allen Blackman (Contact Author)

Inter-American Development Bank (IDB) ( email )

1300 New York Avenue NW
Washington, DC 20577
United States

Zhengyan Li

Indiana University Bloomington ( email )

100 South Indiana Ave.
Bloomington, IN 47405
United States

Antung Liu

Indiana University - School of Public and Environmental Affairs ( email )

1315 East 10th Street
Bloomington, IN 47405
United States

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