EconPort - Comparison of Pollution Control Methods

Method of Pollution Control	Pros	Cons
Command-and-Control	Guarantees a level of abatement Preferred when pollutant is especially harmful & MB/MD is highly inelastic Firms and regulatory agencies experienced with this method	Guarantee comes at the sake of economic efficiency Difficult for government to keep up with pace of technological change Can have narrow focus on just one technique of pollution control
Green Taxes	Provides a lever of control over future program costs The Double-Dividend Effect can generate source of revenue to reduce tax burden and subsidize feebates Ability to apply all the way from top of supply chain down to individual consumers in effort to internalize externality	Sacrifices guarantee over level of pollution reduction for cost certainty Many don't believe in double-dividend effect & assert tax distorts market Primary Tax burden can be shifted to Producer or Consumer High information and Administration Costs with requirement to know MAC
Cap-and-Trade	Guarantees a level of pollution reduction Allows firms to choose most cost-effective way to abate Low information and Administrative Costs Enjoys support of Policymakers, Politicians, and Firms	Guarantee comes at the sake of control over future abatement costs Can't be used for non-uniformly mixing pollutants Banking of allowances can lead to future spikes in emissions Allocation of allowances is subject to rent-seeking from the regulated firms

This is a comparison of the three most commonly used pollution control policies; voluntary control and subsidies aren't used as frequently in modern times.