Incentive schemes operate by providing monetary inducements to firms or consumers to behave in ways that are thought to be socially desirable. The most straightforward…

Pollution targets can also be attained using pollution abatement subsidies. A subsidy is a negative tax, so the incentive effects on firms already in the…

A third type of incentive based pollution control scheme involves the use of marketable emissions permits (Marketable emission permits – an approach to managing ag…

Taxes, subsidies and marketable permits are each cost-effective: they achieve any chosen pollution target at the lowest possible cost. We have already explained why this…

Markets often fail to deliver socially-efficient outcomes where a natural resource is characterised by conditions of open access. A resource is described as an open…

As we explained earlier, where goods are public rather than private, resources will tend to be inefficiently allocated. The inefficiencies we have in mind manifest…