Second-best theory and the use of multiple policy instruments

In many cases policy makers employ multiple instruments to address a single environmental problem, but much of the economics literature on instrument choice focuses on comparing properties of single policy instruments. We argue that under a fairly broad set of circumstances the use of multiple polic...

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Bibliographic Details
Published inEnvironmental & resource economics Vol. 37; no. 1; pp. 111 - 129
Main Authors Bennear, Lori Snyder, Stavins, Robert N
Format Journal Article
LanguageEnglish
Published Dordrecht Dordrecht : Kluwer Academic Publishers 01.05.2007
European Association of Environmental and Resource Economists
Springer Nature B.V
SeriesEnvironmental & Resource Economics
Subjects
Appliances
Cost control
Economic theory
Economics
Energy
Environmental economics
Environmental policy
Equilibrium
Natural resource management
Policy analysis
Policy making
Politics
Property
Studies
Washers & dryers
Water heaters
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Summary:In many cases policy makers employ multiple instruments to address a single environmental problem, but much of the economics literature on instrument choice focuses on comparing properties of single policy instruments. We argue that under a fairly broad set of circumstances the use of multiple policy instruments can be justified as optimal in a second-best world. We examine two broad categories of second-best policy making: cases with multiple market failures only some of which can be corrected at any one time; and cases with exogenous (often political) constraints that cannot be removed. The fact that the use of multiple policy instruments can be justified economically in these two cases does not imply, however, that all multiple instruments employed in actual practice are economically justified.
Bibliography:http://dx.doi.org/10.1007/s10640-007-9110-y
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ISSN:0924-6460
1573-1502
DOI:10.1007/s10640-007-9110-y