Which of the following is a problem that occurs with command-and-control policies?
A) They lead to increased pollution.
B) They decrease the firm's incentives to develop more efficient abatement technologies.
C) An abatement technology that is efficient for one firm may be inefficient for others.
D) B and C are correct.

Question

Quizplus · Accepted Answer

Command-and-control policies may lead to increased pollution because firms may not have the right incentives to reduce pollution further than what is required by law. Additionally, these policies may decrease the firm's incentives to develop more efficient abatement technologies since they are required to meet a specific standard. Lastly, an abatement technology that is efficient for one firm may be inefficient for others since firms differ in terms of their production processes and pollution sources.

Which of the Following Is a Problem That Occurs with Command-And-Control