Abstract
In environmental policy, standards specify a quantity that constrains behavior of polluters. A standard can specify a maximum, such as the maximum amount of emissions allowed, or a minimum, such as the minimum amount of ‘green’ technology. Standards have been used in environmental policy since its inception, and they continue to be used in a wide variety of ways. Though they are not as cost-effective as market-based incentives (MBIs), in practice, they are more flexible than they are often portrayed: they take many forms, and they often are differentiated to improve their cost-effectiveness. They may be more effective than MBIs in achieving reductions from all sources, and they may, in some cases, be easier to monitor and, therefore, to enforce, though they can also produce unintended consequences. They continue to be part of the regulatory toolbox for efficiency, distributional, and perhaps even ethical reasons. Especially in a second-best world, they continue to be a useful tool for regulators.
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