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In this paper I explore this most recent development in regulatory policy and, in particular, the role government plays when it chooses to use private markets (consumer, institutional and corporate) as regulatory instruments to produce and allocate environmental benefits. The privatization of environmental regulation by employing markets to deliver environmental benefits does not involve the implementation of public policy through executive or legislative action. Rather, it is achieved through a public choice to privatize the delivery of environmental regulation by permitting or encouraging decentralized economic power to respond to consumer demands for environmental quality.