Using a Policy Mix for Pollution Control – A Review of Economic Literature

Paul Lehmann

MPRA Paper from University Library of Munich, Germany

Abstract: This article provides a review of economic studies analyzing the use of multiple policies – a socalled policy mix – to cope with single pollution problems. To guide and structure the review, an analytical framework is developed and applied. The framework integrates transaction costs into the analysis of pollution problems and policies to overcome them. Moreover, it understands a pollution externality not only as a market failure but more generally as the failure of private governance structures. Based on this insight, two rationales for using a policy mix are identified. First, a policy mix may help to correct for multiple reinforcing failures of private governance structures, such as pollution externalities and technological spillovers. Second, a policy mix can be employed if the implementation of single first-best policies brings about high transaction costs – e.g., when marginal pollution damages are heterogeneous or polluters are unlikely to comply with the policy. For each rationale, the relevant literature is presented. Based on the review, avenues for future research are identified.

Keywords: policy mix; review; environmental policy; pollution control; externality; transaction costs; Coase (search for similar items in EconPapers)
JEL-codes: H23 Q53 Q54 Q58 (search for similar items in EconPapers)
Date: 2008-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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