Cite an advantage and a disadvantage for command-and-control vs. incentive-based approaches. Then do the same for environmental taxes vs. emissions trading

Answer 1

Command-and-control is simple, since it applies equally to all firms. It may also be seen as fair. The disadvantage is it is inefficient, because it applies uniformly. Incentives-based regulations have the advantage of flexibility, allowing firms that can clean up at lower cost to reduce emissions more than firms that have a higher cost of clean-up. One problem may be an old source bias, whereby older technologies are exempt from trading.
As for taxes vs. trading, taxes have the advantage of familiarity. A disadvantage is knowing how to determine external costs in order to set the tax. Emissions trading leaves it to firms to
determine the cost of clean-up. This is an advantage, since firms have better information than government on clean-up costs. Disadvantages include problems like thin trading, so that the emissions price is not determined competitively.