Abstract

This article reviews some of the foundational insights brought by Tom Tietenberg into academic research on environmental economics, along with some of the most highly cited works that credit these insights as inspiration. It follows three waves of environmental regulation: legal, command-and-control regulation of the 1970s; market-based regulations developed in the 1980s; and voluntary approaches expanded in the 1990s. Following Tietenberg's early work, the article begins with the costs of rigid regulation, the benefits of moving towards incentive-based approaches, and the role of legal liability in regulatory compliance. Having made a compelling case for market-based environmental policies, Tietenberg inspired an abundant literature on emissions trading opportunities and design issues. Among these, the roles of transaction costs, market power, banking and borrowing, and spatial differentiation in emissions trading are highlighted. Finally, attention is turned to the effectiveness of voluntary and information-based mechanisms and Tietenberg's contributions to understanding the channels through which publicly disclosed information can be acted upon. It concludes noting the continued relevance of all these strands of research as environmental economists confront the epochal challenge of climate change.