> You need to read on industrial history if this is not obvious to you.
I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
> Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
To me, this sounds as if the power of the government needs to be huge and centralized? Because obviously local agents cannot come up with globally optimal solution (if the problem is not structured in a way they can).
For example, the huge use of insecticides and pesticides enables the industry of cheap meat and dairy. Regularizing insecticides and pesticides will most definitely increase the costs for the producers and the price of the product will increase. On the other hand, there are enormous subsidies in farming and will these subsidies now increase to keep the prices low?
These regulations, at least that's how it looks to me, are directly impacting the tax payer, not the industry players.
EDIT: I'm out of discussion. Getting to many downvotes for no particular reason.
> I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
Trying to recall what they taught us in business school. Regulations of the kind I think you mean (i.e. ban pollution) are one way to combat externalities, but there are others, in theory.
Econ. researchers stipulate property rights as one way:
If I own the river, and the right to fish in the future, my incentives will shift toward not polluting today. If the river is public and I have no guarantee of future yields, then the game theoretically smart thing to do is pollute as much as I can get away with.
As always, the devil is in the implementation details.
Pre-emtping useless word thinking: I am aware that "property rights" can fall under regulation, depending on definitions. If that bothers you, feel free to s/regulation/bans in the paragraphs preceding this.
> Regularizing insecticides and pesticides will most definitely increase the costs
It will decrease costs but also decrease yield.
If only one farm does this, they lose money.
If it's imposed across an economy and imports of non-compliant produce are taxed, then the reduced yield drives up prices. This is effectively the EU approach.
I'm asking questions to learn something from the discussion. Currently, my opinion is that regulations are necessary, but perhaps they aren't, and I would like to hear why.
> Think of it as an algorithmic problem - local optimization seldom leads to a global optimum. Hence, sometimes global tweaks can benefit an entire system.
To me, this sounds as if the power of the government needs to be huge and centralized? Because obviously local agents cannot come up with globally optimal solution (if the problem is not structured in a way they can).
For example, the huge use of insecticides and pesticides enables the industry of cheap meat and dairy. Regularizing insecticides and pesticides will most definitely increase the costs for the producers and the price of the product will increase. On the other hand, there are enormous subsidies in farming and will these subsidies now increase to keep the prices low?
These regulations, at least that's how it looks to me, are directly impacting the tax payer, not the industry players.
EDIT: I'm out of discussion. Getting to many downvotes for no particular reason.