ABSTRACT
Direct regulation includes measures requiring prescribed behaviour and ignores differences in the cost of compliance. It can take the form of standards, restrictions or bans. In the literature direct regulation is referred to as “command-and-control instruments”, “administrative diktat”, “standards” or simply “regulation”. 74 Regulation and economic incentives differ fundamentally in the scope they leave for individual choice: regulation, as defined above, prescribes precisely what has to be done, leaving the individual resource user with no choice. Economic incentives, on the other hand, specify the quantity of the resource to be used (property rights) or the price of the resource (charges) and leave it to the resource user to decide how to adjust.
