A law stating that power plants are allowed zero emissions of sulfur dioxide is an example of ________.
A) the Coase Theorem
B) command-and-control regulation
C) a Pigovian corrective tax
D) a Pigovian corrective subsidy

Question

Quizplus · Accepted Answer

Command-and-control regulation refers to specific laws and regulations that dictate the actions that firms or individuals must take in order to comply with the law. This law stating that power plants are allowed zero emissions of sulfur dioxide is an example of command-and-control regulation, as it requires power plants to take specific actions to reduce their emissions. The Coase Theorem would involve allowing power plants to negotiate emissions reductions amongst themselves, while Pigovian corrective taxes or subsidies would involve a market-based approach to reducing emissions.

A Law Stating That Power Plants Are Allowed Zero Emissions