Why is legislation to control emissions not favored by economists?

Answer 1

Meg is correct. Most economists do believe that emissions should be controlled.

However, there are at least two ways to do this. One approach would be just legislate a decision -- "all factories must reduce emissions by 20 percent".

This would not be efficient from an economic perspective, since the factories are not all alike. Suppose that is it is very easy for some factories to reduce emissions, but very expensive for others. By using a "cap and trade" system, some factories would keep their emissions the same, while other would drastically reduce their emissions to meet the overall cap.

This would be cheaper -- and acheive the same result -- as legislation.

Answer 2

Economists are not against controlling emissions. They are gainst any govt. fiat and machinery to control emissions. They prefer a market mechanism to control emissions. Raise taxes on environmental polluting industries and consumption of environmental products. Create a market for emmisionsbuying and selling. The economists will help find solutions this way and agree if legislation is consistent with these principles of economics. But doing this way is not popular to common people because they want everything free or avoid paying for emissions that results from production of goods and services they consume. Legislators in democracy do not want to become unpopular even if that means doing things in the wasteful and inefficient ways that ultimatelu hurts the common people who fail to figure oot that hurt.

Answer 3

Most economist do favor such legislation because pollution is a negative externally in the economy. Most favor market based solutions of either taxing the cause or assigning ownership rights instead of direct regulation when it is feasible, but all methods require legislation. Economist are aware there are cost associated with such legislation and so are concerned also that the benefit justifies the cost.

Answer 4

who said so? haha
it depends on which point of views (POV) u take, economists that favor free market principles (usually falls under monetarist) or economists who don't really believe that market is perfect (as you can guess, its Keynesian)

emissions are "negative externalities of production" which would not be accounted for by firms when producing stuff. this means that the 'actual costs of production' (the social marginal cost) is higher than the costs firms perceived they incur (the private marginal costs). the products are overproduced, the prices understated, thus economic efficiencies cant be achieved.

legislation on emissions usually involves taxation, and usually the no of good produced and consumed would be reduced. BUT the tax burden is actually passed on to the consumers in terms of higher prices. this is where economists dont agree. instead of pushing the firms to effectively reduce 'emissions for each unit of product produced' , the govt is burdening the consumers with tax that is meant to punish the producers.

economists that believe the market is perfect and seriously promote free market principal would just disagree on any form of govt intervention in the market. from their POV, the market (demand and supply) knows best.

furthermore, govt int may be more needed in other economics issues like ER, inflation and unemployment.

but there are also other points that would contradict the question:
-control on pollution levels is important to ensure good health
-level of pollution may contribute to wat is defined as economic development and living standards.
therefore its inconclusive that economists do not favour legislation on emissions

huhu.. there's my opinion...

Answer 5

Well, the Coase Theorem might help you to understand why.
And before i continue, may i suggest to the 2nd answerer above me, that Coase theorems does take these things into account.

From wikipedia, "coasean economic analysis, or new institutional economics also often looks at the dynamics of the institutions that create the transaction costs."

And now, the excerpt from the website on Coase Theorem:
"... suggests that under certain conditions, externalities don't cause any inefficiency or DWL at all. So no government action is needed. Furthermore, the legal assignment of property rights will have nothing to do with how economic production is ordered. Legal rights will only determine who receives what economic rents."

My point is, economists are for and against government intervention with regards to the problem of externalities, just as they are for and against government intervention in increasing aggregate demand to boost the economy. It all depends on the school of thought you use to approach the problem.

PS - DWL is the abbreviation for DeadWeight Loss, a term in economics to refer to the loss to society, caused by externalities, subsidies, tax burden, price ceiling, or price floor.

Answer 6

because economists spend too much time looking at charts and graphs and don't have common sense.

Economists must rely on models to explain and predict. They can be no better than their models. I doubt very seriously that the 'economist' who is against emmisions reduction has included the 'costs' of treating athmathics and other breathing disorders, the increase in insurance costs as natural disasters increase, loss of farmland etc.

Their model is too narrow.

Answer 7

Because it is bad for business, and seeing as big business owns the political system in the US, it is unlikely that we will see any change soon.