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Externalities and Corrective Taxes

Plott, Charles R. (1966) Externalities and Corrective Taxes. Economica, 33 (129). pp. 84-87. ISSN 0013-042. https://resolver.caltech.edu/CaltechAUTHORS:20140220-100216781

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Abstract

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


Item Type:Article
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http://www.jstor.org/stable/2552274OrganizationJSTOR Article
Additional Information:© 1966 Published by Wiley on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines.
Issue or Number:129
Record Number:CaltechAUTHORS:20140220-100216781
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20140220-100216781
Official Citation:Externalities and Corrective Taxes Charles R. Plott Economica , New Series, Vol. 33, No. 129 (Feb., 1966) , pp. 84-87 Published by: Wiley on behalf of The London School of Economics and Political Science and The Suntory and Toyota International Centres for Economics and Related Disciplines Article Stable URL: http://www.jstor.org/stable/2552274
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:43886
Collection:CaltechAUTHORS
Deposited By: Susan Vite
Deposited On:20 Feb 2014 18:19
Last Modified:03 Oct 2019 06:12

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