recently been introduced to discourage and, hence, reverse the increasing demands on scarce resources. Similarly, fuel prices have been systematically over-inflated by Treasury for the last few budgets in an attempt either to reduce fuel usage or increase fuel efficiency by the transport sector.
             As with most theory, it is as good as far as it goes and, in order to simplify tractability, leaves out more complex issues, which are difficult to address. Hence, there is no real evidence of the effectiveness of any of these current measures. 'Voluntary' agreements with the car manufacturers have achieved far more on engine design and efficiency targets. Landfill disposal has been reduced, but the number of new golf courses and earthworks currently profiting from the tax must be finite and the disposal loads will probably return to normal. The fuel tax has made no perceptible impression on the transport sector, although this may be due-in part-to the current oil glut. All these economic measures have simply increased the cost of doing business. It has to be done-business as usual!
             So, it could be argued that market forces have delivered neither social change, nor real reductions. Nevertheless, the attraction of additional (sizeable) sources of income to a government perhaps faced with recession, and consequent decreases in income and increases in social-security demands, is likely to prove irresistible. In that case, we ought to look in turn at the advantages and disadvantages; strengths and limitations of the two alternatives: market instruments or regulation.
             The simplest instrument to implement, understand and, hence, the most popular and proven is a tax.
             Put simply, taxes guarantee the cost of a measure, not the outcome. It can be argued that regulation, including permits tradeable or otherwise, achieves exactly the reverse. But why is the outcome unpredictable? This is because these instruments would have to be ite...