What is the difference between command-and-control policies and market-based policies toward externalities?
A)Command-and-control policies provide incentives for private decisionmakers to solve the problems on their own, whereas market-based policies regulate behavior directly.
B)Command-and-control policies rely on taxes, whereas market-based policies rely on quotas.
C)Command-and-control policies regulate behavior directly, whereas market-based policies provide incentives for private decisionmakers to change their behavior.
D)Command-and-control policies are efficient, whereas market-based policies are inefficient.

Question

Quizplus · Accepted Answer

Command-and-control policies involve direct regulation, such as setting a limit on pollution emissions or mandating the use of a specific technology. Market-based policies, on the other hand, provide incentives for private decisionmakers to change their behavior in a way that leads to a reduction in externalities. This can be achieved through methods such as taxes or tradable permits. Market-based policies have been shown to be more efficient than command-and-control policies because they allow for flexibility in how firms choose to reduce their emissions or address other externalities.

What Is the Difference Between Command-And-Control Policies and Market-Based Policies