Are cap-and-trade programs more environmentally effective than conventional regulation?

This paper considers the evidence and possible reasons that cap-and-trade programs are more effective in meeting environmental objectives than conventional prescriptive regulation. The evidence is based mostly, but not entirely, on the SO2 provisions of the Acid Rain Program and it consists of quicker implementation, accelerated emission reductions, absence of exemptions, and the lack of "hot spots." The paper also notes the trend, evident in the Northeastern NOx Budget Program and the RECLAIM programs, for cap-and-trade regulation to supplant conventional prescriptive regulation even when regulators have ample legal authority to impose the latter. This trend and the better environmental performance of these programs are attributed to the advantages that cap-and-trade programs offer to both pragmatic regulators and regulated entities