All Questions
3 questions
1
vote
1
answer
95
views
What can be done when pigouvian taxes must be so high that black markets become viable?
The whole point of a pigouvian tax is to force producers to bear an extra cost equal to the total social cost of a good right? But, the problem this presents is, what if the social cost is very high? ...
- 125
4
votes
1
answer
196
views
Pigouvian tax equivalent to Coasian payments
Consider an economy with two goods, $x$ and $y$. Suppose person a's consumption of good $y$ imposes a negative externality on person b. Person a's utility maximisation problem is
$$\max_{x_a,y_a} \ ...
- 93
1
vote
1
answer
784
views
Who pays externalities?
Suppose the state raises taxes in order to internalise externalities. Doesn't the consumer have to pay the additional external costs then, because the prices are raised due to the taxes?
- 113