The Problem with Pigou

Our friend and colleague John Nye, who teaches economics at George Mason, has published a powerful critique of so many proposals calling for Pigovian taxes, i.e. taxes designed to reduce harmful externalities such as carbon emissions. You can read Professor Nye’s essay here. Below is an excerpt:

Even if we insisted on a Pigovian tax as a precautionary measure, it would make sense only if it replaced all preexisting subsidies, taxes, and regulations rather than being added on top of existing arrangements. Moreover, a truly scientific proposal would also make clear under what circumstances the Pigou tax should be lowered as well as raised.

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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