CONTROLLING THE MONOPOLISTIC POLLUTER - NIHILISM OR ECLECTICISM

This paper is concerned with the consequences of pollution control when the polluter is monopolist who can choose between abating pollution by reducing output and by adopting a less-polluting technology. It is suggested that the risk of welfare losses resulting from control policy is lower when technology is flexible than when it is rigid. Nevertheless some risk does remain, so the paper concludes with a discussion of the possible use of selective control instruments to keep the risk to a minimum.