So theoretically the most targeted attack on commercial production would be to legalize possession and free distribution, but keep it illegal to buy and sell. But needless to say, I don't think this would be palatable to most people, as rational as it might be. It also seems like current laws have already suppressed commercial production pretty successfully (much more so than with drugs, I'd say).

But outside economy considerations, do wonder if the current approach is the best way of addressing what we (should) care about most: reducing the number of children molested. Chasing people who download CP doesn't directly save any kids, so is it a good use of resources? Do producers ever go unpunished because CP is so "toxic" that some people are afraid to report having seen it? That kind of thing.