The Costs and Benefits of Environmental Regulation

The Costs and Benefits of Environmental Regulation

Imad A. Moosa and Vikash Ramiah

The Costs and Benefits of Environmental Regulation presents a thorough investigation into environmental regulation, its economic and financial effects and the associated costs and benefits. A variety of issues, pertaining to regulation in general and environmental regulation in particular, are examined. These issues include the theories of regulation and how it is viewed in terms of the free market doctrine, forms of regulation, command-and-control regulation as opposed to market-based regulation and the cost–benefit analysis of environmental regulation.

Chapter 2: Regulation and the free market doctrine

Imad A. Moosa and Vikash Ramiah

Subjects: economics and finance, environmental economics, environment, environmental economics, environmental governance and regulation, politics and public policy, environmental governance and regulation


The recent history of regulation shows that while major regulatory measures are typically enforced in response to major events, such as the great depression of the 1930s, alternating waves of regulation and deregulation have been triggered by the prevalence at a particular point in time of proor anti-regulation thought. More specifically, the tendency to deregulate is driven by strong belief in laissez-faire, the free market doctrine. This is why we start this chapter by examining the history of regulation and deregulation before we discuss the free market doctrine. We will leave the discussion of environmental regulation as it pertains to the free market doctrine to Chapter 4. Regulation is as old as civilization – it was common in ancient Egypt, India, Greece and the Roman Empire, even on an international level. An example of international regulation in ancient time was the use of gold to some degree as an international currency. On a more local level, standardized weights and measures were used in various parts of the ancient world. An early example of competition law can be found in Roman law. Around 50 BC a law was put in place to protect the grain trade, imposing heavy fines on anyone deliberately stopping supply ships. In AD 301 the death penalty was imposed on anyone violating the tariff system, for example by buying up, concealing or contriving the scarcity of everyday goods.

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