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Pigouvian versus Marshallian tax: market failure, public intervention and the problem of externalities

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  • Katia Caldari
  • Fabio Masini

Abstract

In The Economics of Welfare , Pigou develops the idea of what will be widely known as ‘Pigouvian tax’. Together with the concept of externality, they constituted two of the most important founding elements of modern welfare economics. Many have suggested that, on the way he treated externalities, Pigou might have drawn from his master, Alfred Marshall (see the proposal for a ‘fresh air rate’). The aim of this paper is to inquire into the features of the original proposals made both by Marshall and Pigou, underline the differences between the two and challenge the hypothesis of ‘continuity’.

Suggested Citation

  • Katia Caldari & Fabio Masini, 2011. "Pigouvian versus Marshallian tax: market failure, public intervention and the problem of externalities," The European Journal of the History of Economic Thought, Taylor & Francis Journals, vol. 18(5), pages 715-732, December.
    • Handle: RePEc:taf:eujhet:v:18:y:2011:i:5:p:715-732
    DOI: 10.1080/09672567.2011.629300
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    References listed on IDEAS

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    1. Peter Groenewegen, 1995. "A SOARING EAGLE: Alfred Marshall 1842–1924," Books, Edward Elgar Publishing, number 193.
    2. Backhouse,Roger E. & Nishizawa,Tamotsu (ed.), 2010. "No Wealth but Life," Cambridge Books, Cambridge University Press, number 9780521197861, November.
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    Cited by:

    1. Claudia Kettner-Marx & Daniela Kletzan-Slamanig, 2018. "Carbon Taxes from an Economic Perspective," WIFO Working Papers 554, WIFO.
    2. Sheila Dow, 2020. "Alfred Marshall, Evolutionary Economics and Climate Change: Raffaelli Lecture," Department Discussion Papers 2001, Department of Economics, University of Victoria.
    3. Ekici, Filiz & Orhan, Gamze & Gümüş, Öner & Bahce, Abdullah Burhan, 2022. "A policy on the externality problem and solution suggestions in air transportation: The environment and sustainability," Energy, Elsevier, vol. 258(C).
    4. Luigi De Paoli, 2016. "The EU Emissions Trading System: For an effective and viable reform," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 2016(1), pages 5-40.

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