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Porrini, Donatella --- "Environmental Policies Choice as an Issue of Informational Efficiency" [2005] ELECD 147; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics, Second Edition" (Edward Elgar Publishing, 2005)

Book Title: The Elgar Companion to Law and Economics, Second Edition

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845420321

Section: Chapter 23

Section Title: Environmental Policies Choice as an Issue of Informational Efficiency

Author(s): Porrini, Donatella

Number of pages: 14

Extract:

23 Environmental policies choice as an issue of
informational efficiency
Donatella Porrini


Choosing between different environmental policy instruments
The problem of the choice of environmental policy instruments has been an
issue since Pigou (1932) analysed the need for state intervention when pri-
vate costs diverge from social costs, and suggested that the solution would be
to internalize the externalities through taxation. Coase (1960) criticized the
proposed state intervention, and affirmed that there is no reason to suppose
that governmental regulation is called for simply because the problem is not
very well handled by the market or the firm. The key feature is the presence
of transaction costs that make one policy better than another.
The ensuing debate has been conducted along these two opposite views: on
the one hand, the supporters of the idea that the choice of policy instruments
to be applied following a market failure is a public matter and the state, as
policy designer, should select the optimal instrument and take responsibility
for its imposition in the public interest; versus, on the other, the supporters of
market-based instruments, trying to fight a battle against a sort of `anti-
market' mentality based on a reluctance to apply market-oriented instruments
(Lewis, 1996).
If we want to continue along these lines the problem would be to compare
the efficiency of instruments that can be considered `public oriented' and
those that can be considered `market oriented', where the first are character-
ized by a public agency with a public ...