Externalities and Corrective Taxes

摘要: Consider a factory which produces some unspecified product called X. The process of producing X involves the creation an external diseconomy for nearby business. It is generally recognized that this diseconomy may be result resource used in production of such as smoke created from burning process. However, the participants recent discussion externalities, well Pigou, have assumed either by means their examples, or explicitly, that in cases corrective tax should placed on X. This procedure, except under rather restrictive conditions, is fundamentally incorrect. If exists, it must placed either output or, certain resource input generated.