Effects of Externality-Corrective Taxation on the Extent of the Market and Network Size of Division of Labor

摘要: Applying the inframarginal analysis of specialization and effects external costs in production their control through taxation, this paper shows that, on top allocational inefficiency input and/or output mix caused alleviated, there is organizational level division labor extent market. External may lead to either too high or low a mixture efficient inefficient structures. Low-cost taxes directly variables causing remove but not be feasible, as, e.g., home difficult observe. Sales taxes/subsidies are completely useless as general-equilibrium adjustments yields zero effects. A tax cum income transfer scheme effective alleviating inefficiencies within certain ranges parametric values. With other range parameter values, optimum rate 0 since positive Pigovian generates organization distortion that outweighs corrective effect allocative distortion.