The Effectiveness of Effluent Charges Where “Industry” Structure Varies

Economists have long argued for the use of pricing incentives for the control of pollution. The economic case is a compelling one: large savings in costs of abatement and a continuing incentive for the development of new techniques to reduce pollution. ¹ By making pollution costly, a set of pricing incentives can mobilize the forces of the market so that abatement activities become directly profitable for individual firms and consumers.