Goverenments today face a complex and evolving set of problems arising in part from globalization, technological change, and rapid social change. In this more demanding and dynamic environment, many traditional instruments such and command-and-control regulation are diminishing in effectiveness and efficiency. Inflexible and detailed regulations also often conflict with other priorities, such as the need for competitive and innovative economies. Governments are now looking for new ways to address economic and social problems. One of the alternatives to traditional command-and-control regulation is the use of marketable permits and obligations. Based on the growing need record of actual performance of these instruments, this paper provides practical insights to difficult design, implementation, and management issues. It includes a checklist to aid practitioners in assessing when these instruments are a feasible alternative to traditional regulatory practices.
