Choice Among Policy Instruments for Pollution Control

This paper discusses alternative approaches to the problem of pollution control, from the point of view of a closed model in which regulators, regulated, and other interest groups interact in a single decision structure. It is argued that policy instruments cannot be selected only, or even primarily, on the basis of their formal properties, for these allow a number of different, often conflicting institutional realizations. The crucial choices involve not the instruments themselves, but institutionally determined ways of operating them. But to discuss institutional choice adequately, the usual model in which people pursue their self-interest within exogenously determined rules must be extended to cover the determination of the rules themselves. The comparison between, say, an uncorrupted system of effluent charges, and regulatory machinery captured by special interests is then seen to be a specious one. Where effluent charges have been used, they have proved to be as subject to bargaining and as conditioned by considerations of political and administrative expediency as standards, licenses, and other regulatory measures.