Command and control
An alternate approach to environmental regulation is a command and control approach. This is much more prescriptive than market-based instruments. Command and control regulatory instruments include emissions standards, process/equipment specifications, limits on input/output/discharges, requirements to disclose information, and audits. Command and control approaches have been criticised for restricting technology, as there would be no incentive for firms to innovate. Empirical studies have shown the opposite; external price changes can induce innovation as companies are forced to address the market failure of under-investment.