SUPERIORITY OF FISCAL SOLUTION IN ENVIRON MENTAL-POLICY FROM AN INFORMATION STANDPOINT - A PIGOUVIAN TAX

According to the literature no superior instrument for environmental p olicy exists. Ex ante fixing of pollution standards is the main cause for this view. Such a fixing, however, is not the appropriate assumpti on for evaluating environmental policy. An effluent tax with ex post f ixing of tax rates is superior. The regulatory authority needs less in formation for implementing it. Knowledge of marginal damage suffices w hereas for fixing standards regulators ought to have additional inform ation. The same is true for command and control regulations. Advantage s stemming from the informational superiority are described and furthe r comparisons with other instruments are made.