Hepburn, Cameron (2006) Regulation by prices, quantities, or both: a review of instrument choice. Oxford review of economic policy, 22 (2). pp. 226-247. ISSN 0266-903X
Choosing appropriate policy instruments is an important part of successful regulation. Once objectives are agreed and suitable targets adopted, policy-makers can employ command-and-control regulation and/or economic instruments, and choose between fixing a price or a quantity. This paper examines the relative advantages of price, quantity, and hybrid instruments according to: their efficiency under uncertainty; the trade-off between credible commitment and flexibility; implementation; international considerations; and political economy. Various illustrations of the theory are provided, with two detailed applications to climate change and transport policy, specifically congestion and ‘safety pricing’.
|Additional Information:||© 2006 The Author|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Sets:||Research centres and groups > Grantham Research Institute on Climate Change and the Environment
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