Comments on paper by Daniel H. Cole and Peter Z. Grossman

Date15 August 2002
Pages243-244
Publication Date15 August 2002
DOIhttps://doi.org/10.1016/S0193-5895(02)20012-3
AuthorAnthony Ogus
COMMENTS ON PAPER BY
DANIEL H. COLE AND
PETER Z. GROSSMAN
Anthony Ogus
I begin with my conclusion. This is an excellent paper: it probes a very important
dimension to instrument choice; it is well-structured and elegantly written; it
has important policy implications which to a large extent coincide with my own
intuitions (Ogus, 1998, pp. 780-783).
As regards the principal methodological issue, the extension of the models to
cover monitoring and enforcement costs, the authors are preaching to the con-
verted. It is obvious, to a lawyer, that these are very important variables, without
reference to which any analysis is seriously incomplete. It also reinforces the
significance of the "law and economics" approach, in contrast to "pure" economic
analysis: the costs of institutional arrangements lie at the heart of the matter.
Two aspects of the paper nevertheless came to me as a surprise. The first is
the assertion that these matters have been disregarded in the literature. It may
be that the "purer" economic models have not included the full cost variables,
but economists have certainly taken account of them. In pulling off my shelf
a text written over twenty years ago on the economics of pollution control,
I found that it deals with monitoring and enforcement costs in the context
of comparing effluent fees with command-and-control (Burrows, 1979,
pp. 133-135). And, albeit with less rigour, the consideration of these costs
features in Richard Stewart's well known law journal articles from the same
period (e.g. Stewart, 1981) and in my book on regulation (Ogus, 1994, pp. 155,
167, 253).
An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional
Design, Volume 20, pages 243-244.
© 2002 Published by Elsevier Science Ltd.
ISBN: 0-7623-0888-5
243

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