firms is the given level of pollution abatement being achieved at the
lowest possible cost.
Direct regulatory controls are usually inefficient because they do not minimize the total cost of
a given amount of pollution abatement.Direct controls are also expensive to monitor and to enforce. The
regulatory agency has to check—factory by factory, farm by farm—how
many pollutants of what kinds are being emitted. It then also needs a
mechanism for penalizing offenders. Accurate monitoring of all potential
sources of pollution requires a considerable level of resources. Moreover,
the system of fines and penalties needs to be harsh enough to induce
potential polluters to obey the law. A potential polluter, required to limit
emissions of a pollutant to so many kilograms or litres per day will take
into account the cost of meeting the standard, the probability of being
caught, and the severity of the penalty before deciding how to behave. If
the chances of being caught and the penalties are small, the direct
controls may have little effect. As we will see, however, the considerable
costs of monitoring and enforcement apply in a similar way to all kinds of
pollution policies.