When the government uses a command-and-control policy tosolve an externality, it:

Question

Quizplus · Accepted Answer

A command-and-control policy involves directly regulating behavior, such as setting limits on emissions or imposing fines for certain actions. This is different from a market-based policy, such as a tax or tradable permit system, which provides incentives for individuals to make decisions that reduce the negative externality. The effectiveness of command-and-control policies can vary and may depend on the specific circumstances of the externality, but they are a common option for governments to address negative externalities.

When the Government Uses a Command-And-Control Policy Tosolve an Externality