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Pigouvian policies in closed behavioral systems

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  • Peter Aranson
  • Terry Ferrar
  • Peter Sassone

Abstract

This essay-analyzes the Pigouvian tax-subsidy policy, reviews the traditional justification and several practical and theoretical criticisms of it, and offers three arguments about the Pigouvian policy and the implied structure of effluent charges (as well as subsidies). First, many proponents of a Pigouvian policy misinterpret its purpose. The tax is not designed to reduce pollution to an ‘acceptable’ level, but to maximize joint production value. Second, Pigouvian effluent charges may violate some constructions of the equal protection clause. Third, these charges may violate, also, some constructions of the due process clause, as well as the ethical criteria that the right of due process implies. Copyright Springer 1978

Suggested Citation

  • Peter Aranson & Terry Ferrar & Peter Sassone, 1978. "Pigouvian policies in closed behavioral systems," Public Choice, Springer, vol. 33(4), pages 5-26, December.
    • Handle: RePEc:kap:pubcho:v:33:y:1978:i:4:p:5-26
    DOI: 10.1007/BF03187593
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    References listed on IDEAS

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    1. Buchanan, James M & Tullock, Gordon, 1975. "Polluters' Profits and Political Response: Direct Controls Versus Taxes," American Economic Review, American Economic Association, vol. 65(1), pages 139-147, March.
    2. Buchanan, James M, 1969. "External Diseconomies, Corrective Taxes, and Market Structure," American Economic Review, American Economic Association, vol. 59(1), pages 174-177, March.
    3. Baumol, William J, 1976. "It Takes Two to Tango, or Sind "Separable Externalities" Vberhaupt Moglich?," Journal of Political Economy, University of Chicago Press, vol. 84(2), pages 381-387, April.
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    Cited by:

    1. Endres, Alfred, 1981. "Taxing the monopolistic polluter: A reconsideration," Discussion Papers, Series B 14, University of Konstanz, Department of Economics.

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