The Pigou Problem
John V. Nye
George Mason University - Department of Economics; National Research University Higher School of Economics
August, 20 2008
Regulation, Vol. 31, No. 2, Summer 2008
This article calls into question the Pigovian justifications for higher taxes on goods and services that generate negative externalities. Insisting on a Pigovian tax as a precautionary measure only makes sense if it replaces all preexisting subsidies, taxes, and regulations rather than being added on top of existing arrangements. The relevant issue is whether the activities causing the externality are at their socially optimal level.
Number of Pages in PDF File: 6
Keywords: Pigovian tax, Pigou, taxation, tax, externalities, externality, transfers, regulation, global warming, pollution, gasoline, coase,
JEL Classification: D00, D6, D62, H00, H2, H20, H21, H23Accepted Paper Series
Date posted: August 22, 2008
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