A new model of regulation should relegate the regulators to their proper place in the larger scheme of things. The environmental performance of factories is determined by the interactions of multiple agents, with multiple incentives. Although the State can and should have a continuing role in the regulation of pollution externalities, the importance of the Community and the Market must also be recognized.
Within the classic paradigm for analyzing pollution control issues the state holds centre stage with two principal agents; regulators and the law -- expected to set and enforce rules of environmental behavior. The regulator determines 'optimum pollution' and seeks to attain it by using command-and-control (mandating factories not to pollute above a determined level) or market-based instruments (setting a pollution charge, or allowing factories to trade pollution permits within the determined limits). In this respect, pollution charges and tradable pollution permits can be effective regulatory instruments under the right conditions.
(2) Strengthening central regulatory agencies should not empower them to impose uniform standards on heterogeneous communities under the guise of 'administrative efficiency.' Much local variation in regulation is legitimate, and should be recognized as such.