> I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
Trying to recall what they taught us in business school. Regulations of the kind I think you mean (i.e. ban pollution) are one way to combat externalities, but there are others, in theory.
Econ. researchers stipulate property rights as one way:
If I own the river, and the right to fish in the future, my incentives will shift toward not polluting today. If the river is public and I have no guarantee of future yields, then the game theoretically smart thing to do is pollute as much as I can get away with.
As always, the devil is in the implementation details.
Pre-emtping useless word thinking: I am aware that "property rights" can fall under regulation, depending on definitions. If that bothers you, feel free to s/regulation/bans in the paragraphs preceding this.
Trying to recall what they taught us in business school. Regulations of the kind I think you mean (i.e. ban pollution) are one way to combat externalities, but there are others, in theory.
Econ. researchers stipulate property rights as one way:
If I own the river, and the right to fish in the future, my incentives will shift toward not polluting today. If the river is public and I have no guarantee of future yields, then the game theoretically smart thing to do is pollute as much as I can get away with.
As always, the devil is in the implementation details.
Pre-emtping useless word thinking: I am aware that "property rights" can fall under regulation, depending on definitions. If that bothers you, feel free to s/regulation/bans in the paragraphs preceding this.