Market Failure, Global Warming, And Carbon Tax

Even the most fervent proponents of the market or, equivalently, the most ardent opponents of government intervention in the economy, would accept that there is a legitimate economic role for the government. In particular, we have seen that the role of the government as a fair and effective referee of competition between private sector firms is critical to even the most laissez-faire market economy. A fair and effective referee helps to ensure that the best firm — in other words, the firm that delivers the best value for consumers — wins the game of competition. The level playing field drives forward the dynamic competition that propels entrepreneurs to create new and better products and technologies, and relentlessly lifts living standards and human well-being. We cannot overemphasize the critical importance of the government’s referee role, but it is by no means the government’s only role in a market economy…