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    Question

    Which of the following is a limitation of the Command

    and Control approach in environmental economics?
    A It encourages technological innovation and the development of cleaner production methods Correct Answer Incorrect Answer
    B It provides flexibility for industries to choose the most cost-effective pollution control measures. Correct Answer Incorrect Answer
    C It may result in higher compliance costs for industries, potentially affecting their competitiveness. Correct Answer Incorrect Answer
    D It relies on market-based incentives to internalize environmental externalities. Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    It may result in higher compliance costs for industries, potentially affecting their competitiveness. Explanation: The Command-and-Control approach in environmental economics, while effective in setting specific regulations and standards for environmental pollution control, has certain limitations. One such limitation is that it can impose higher compliance costs on industries. Under this approach, industries are legally obligated to meet the prescribed environmental standards, which may require significant investments in pollution control technologies or practices. These compliance costs can be substantial and may affect the competitiveness of industries, particularly in comparison to industries operating in countries or regions with less stringent environmental regulations. The higher costs associated with compliance can potentially lead to the relocation of industries to areas with less strict regulations, resulting in a phenomenon known as "pollution havens." This limitation highlights the need to strike a balance between environmental protection and the economic viability of industries when implementing the Command-and-Control approach.

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