Information Difficulties: The Individual Firm and the Costs of Environmental Policies

On rare occasions, an environmental policy provides benefits with zero or even negative costs. Such policies are referred to as “no regrets policies.” For example, many people are unaware that replacing high-wattage ordinary incandescent light bulbs with (higher priced) but much lower wattage compact fluorescent or LED bulbs would be both less expensive and provide environmental improvements (less energy generated with reduced pollution and CO2 buildup). Another example is the recycling of aluminum, an effort that can end up being quite profitable.