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 Subsidies! The Other Incentive‐Based Instrument: The Case of the Conservation Reserve Program

Hongli Feng, Catherine Kling, Lyubov Kurkalova, and Silvia Secchi

in Moving to Markets in Environmental Regulation: Lessons from Twenty Years of Experience

This essay studies a very large and important example of an environmental subsidy program — the Conservation Reserve Program (CRP). The CRP was introduced in 1985. It investigates how much less ... More

This essay studies a very large and important example of an environmental subsidy program — the Conservation Reserve Program (CRP). The CRP was introduced in 1985. It investigates how much less efficient, if any, a command-and-control (CAC) form of regulation would have been. That is, it seeks to assess the policy as implemented relative to a fundamentally different form of regulation — CAC. It then studies the ex post performance of this incentive-based instrument. In so doing, it provides information on the degree to which market-based incentive programs, as they have actually been implemented, have or have not lived up to the original optimism with which economists viewed such instruments.Less

Policy Prospects for Regulating Private Military and Security Companies

Eugenio Cusumano

in War by Contract: Human Rights, Humanitarian Law, and Private Contractors

Although the PMSI does not operate in a complete legal vacuum, its inherently transnational nature makes traditional state regulation insufficient. The governance of PMCSs is thus a complex endeavour ... More

Although the PMSI does not operate in a complete legal vacuum, its inherently transnational nature makes traditional state regulation insufficient. The governance of PMCSs is thus a complex endeavour involving a broader network of actors alongside states, such as international and non-governmental organizations, the industry and its private customers. To unravel the challenges posed by the PMSI, this chapter focuses on three questions. First, it analyses what to regulate, exploring the activities of PMSCs and the dynamics of the market where they operate. It then concentrates on why the market should be regulated by drawing on the literature on civil-military relations and democratic control over the use of force. Finally, it focuses on how to regulate, analysing the potential of a combined approach based on legal regulation, market incentives, and strengthened self-regulation. It looks at the challenges and opportunities for regulation at the national, international, and EU level.Less

Federalism as a Commitment to Preserving Market Incentives

Yingyi Qian

in How Reform Worked in China: The Transition from Plan to Market

We advance a new perspective in the study of federalism. Our approach views federalism as a governance solution of the state to credibly preserving market incentives. Market incentives are preserved ... More

We advance a new perspective in the study of federalism. Our approach views federalism as a governance solution of the state to credibly preserving market incentives. Market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures. The salient features of federalism — decentralization of information and authority and inter-jurisdiction competition — help provide credible commitment for these purposes. In addition, we discuss factors relevant for sustaining federalism.Less

A Theory of Unofficial Market Enforcement

Julia C. Morse

in The Bankers' Blacklist: Unofficial Market Enforcement and the Global Fight against Illicit Financing

This chapter presents a theory which describes in general terms the conditions under which an international organization (IO) can use unofficial market enforcement to incentivize policy improvements. ... More

This chapter presents a theory which describes in general terms the conditions under which an international organization (IO) can use unofficial market enforcement to incentivize policy improvements. This pathway requires member states to invest initially in establishing an IO's salience by working to increase its informational advantages, cement its authority with coercion, and improve its legitimacy. It also requires governments to adopt regulation that reconfigures market incentives to support an IO's mission. Under these conditions, IO focal points can harness the power of market processes indirectly and to great effect. While all market actors can influence domestic policy, unofficial enforcement via the banking sector is particularly effective at reconfiguring domestic politics and increasing incentives for policy change.Less

The Capitalist Market

Eric T. Freyfogle

in Our Oldest Task: Making Sense of Our Place in Nature

The capitalist market embodies and accentuates key elements of modern culture: it endorses human exceptionalism, treats people as autonomous individuals, discounts the future, fragments and ... More

The capitalist market embodies and accentuates key elements of modern culture: it endorses human exceptionalism, treats people as autonomous individuals, discounts the future, fragments and commodifies nature’s parts, overlooking ecological interconnections and most life forms; denies human ignorance and sensory limits, strips market participants of moral responsibility, and equates normative goodness with the satisfaction of individual preferences, By rewarding aggression and risk-taking the market provides incentives to misuse nature and by dividing people into their individual roles saps the community as such of power. This system needs reform, not because markets are inherently destructive, but because of the ways today’s market capitalism entrenches these cultural attitudes. Reform of the economy is thus not rightly thought about as a separate undertaking (as a push for a new economy); it must be part of a larger campaign of cultural change. The chapter ends by noting how the campaign for such cultural reform will bear little resemblance to the ongoing push for gay rights or marriage equality—a typical civil right campaign that sought change in one aspect of modern culture while leaving the vast bulk of it unaltered, including all elements relating to humans and nature. Less

The Transition to a Green Economy

John A. Mathews

in Greening of Capitalism: How Asia Is Driving the Next Great Transformation

Part III draws the threads together to discuss the emergence of this new model of “green development”, or green growth capitalism. Chapter Seven is concerned with the process of transition itself, ... More

Part III draws the threads together to discuss the emergence of this new model of “green development”, or green growth capitalism. Chapter Seven is concerned with the process of transition itself, emphasizing the barriers and difficulties encountered by any change on the scale of the new greening trajectory. The greening of markets for energy, commodities and capital can be expected to propagate to encompass the entire economy, through multiple inter-firm connections and driven by competitive forces. Green products will call for new value chains that will propagate via intermediate suppliers and aggregators back to ultimate commodity suppliers, where the greening of commodity markets will exert their effects downstream. The barriers that stand in the way of this emergent system are formidable, from the protection of vested interests and continuation of subsidies to fossil fuels, to the clash of sectional interests. Ultimately it is strong states that drive fundamental change.Less

Norms, Laws, and Markets: Implications for Policy

in The Rewards of Punishment: A Relational Theory of Norm Enforcement

This chapter argues that norms do not exist in a vacuum, but, rather, operate side by side with government penalties and market incentives. Norms are often overlooked as a source of solutions to ... More

This chapter argues that norms do not exist in a vacuum, but, rather, operate side by side with government penalties and market incentives. Norms are often overlooked as a source of solutions to social problems, however. Further, policy interventions based on governments or markets may have unintended effects on norms. The chapter describes one way of thinking about the relation between norms and law and between norms and markets, and describes an experimental test of the predictions regarding the effect of a strong legal system on social relations. It cites an example of how recognizing the power of social norms might affect the way people think about policy, focusing in particular on education.Less

Airpocalypse in Beijing and Delhi

Xuefei Ren

in Governing the Urban in China and India: Land Grabs, Slum Clearance, and the War on Air Pollution

This chapter investigates the differences between territorial and associational forms of governance that are apparent in the case of air pollution control. It examines Beijing's clean air campaign ... More

This chapter investigates the differences between territorial and associational forms of governance that are apparent in the case of air pollution control. It examines Beijing's clean air campaign that is led by the municipal government and applies a territorial strategy of holding local officials responsible for reducing pollution within their jurisdictions. It also discusses New Delhi's clean air campaign that has been spearheaded by environmental non-government organizations (NGOs), which strategically mobilize the Indian Supreme Court to prod the Delhi government into action. The chapter examines how both Beijing and New Delhi's approach will not be effective in tackling the problem of air pollution. It speculates whether blue skies can return to Beijing and Delhi through a combination of factors that depend on strong government intervention, private-ector compliance, market incentives, and citizen participation beyond the urban middle class and NGOs.Less

School Reform

Jennifer L. Hochschild and Nathan Scovronick

in American Dream and Public Schools

AMERICANSGIVE A GRADE OF “B PLUS” to the schools attended by their own children, a “B minus” to the public schools in their community, and a “C” to the public schools nationally. Incumbent ... More

AMERICANSGIVE A GRADE OF “B PLUS” to the schools attended by their own children, a “B minus” to the public schools in their community, and a “C” to the public schools nationally. Incumbent politicians extol the impact of the educational reforms they have sponsored while insurgents point to the problems that remain. Some analysts call for an “autopsy” on public education, others insist that such rhetoric represents a “manufactured crisis” comprised of “myths [and] fraud.” The American public education system is not in crisis. Some public schools are impressive and many are doing a good job, although most are not as good as they should be. In a few places, chiefly in poor urban districts (and in some poor rural districts as well), schools are failing miserably; they provide the evidence for people who see a crisis. Once again the most serious problems result from inequality. In part because of home and community influences, poor children often come to school less ready to learn than others, and they face more obstacles to educational success as they grow up. Parents and communities can and must contribute to alleviating this problem, just as social policies such as full employment, universal health insurance, and family allowances could help. As we have seen, however, it is the schools to which we have given the central responsibility to make the American dream work, to provide the structure and tools that all children need to pursue their dreams and maintain democracy. America has chosen to invest in schools rather than these other social policies to try to equalize opportunity; if our nation allows public education to fail the children who most need its help, then the dream is merely a sham. We cannot simultaneously substitute schools for other policies to alleviate poverty and permit schools to shirk the tasks needed to do the job. School reform can help poor children, and others, improve their performance. The movement for high standards has created a mechanism that can help all students to learn more. Preschool, summer school, and small classes can help them. Less