Great piece!, I just wanted to let you know that building on E. Ostrom's work on externalities and on Mulligan's work on externalities, you can consult two recent pieces on the nature of externalities and their properties that are very close to what you guys are saying:
This is a great post that really challenges the conventional wisdom about externalities. It makes me wonder why the first thought of so many economists was to support taxes to combat them and how those thoughts went unchallenged for so long. Do you have any insight on that matter?
I think that I would frame your question a bit differently. I think that there have been a number of economists who have thought about and challenged the conventional wisdom over the years. The real question to me is why this stuff hasn't permeated more into the textbooks. A think a case could be made that some of this stuff might be a little too in-depth for an introductory course, but that doesn't explain why it hasn't permeated more advanced courses.
Great essay that sheds some light on a seldom-discussed topic! We should tax externalities when we can do so with reasonable effectiveness. We should not allow the perfect be the enemy of the good. When it comes to carbon taxation, for instance, it is probably best, as I outlined at Risk & Progress, to tax upstream fossil fuel consumption rather then downstream usage. To make this even more targeted, we could except taxation for non-combustion uses from taxation. It's not perfect, but it's better than the status quo.
"The villages near the communal forests created rules that dictated which trees could be cut down, when they could be cut down, and how people would be punished if they violated these rules."
and
"Places like schools, hospitals, and workplaces have incentives to come up with ways to mitigate the spread of infectious diseases."
How any of these is really different from the government-imposed rules?
Great piece!, I just wanted to let you know that building on E. Ostrom's work on externalities and on Mulligan's work on externalities, you can consult two recent pieces on the nature of externalities and their properties that are very close to what you guys are saying:
1. On the nature and structure of externalities
https://link.springer.com/article/10.1007/s11127-023-01098-1
2. Elinor Ostrom and public health: https://www.tandfonline.com/doi/full/10.1080/03085147.2022.2028973
In fact, we are just publishing a 'special issue' at public choice on externalities that will be out very soon
This is a great post that really challenges the conventional wisdom about externalities. It makes me wonder why the first thought of so many economists was to support taxes to combat them and how those thoughts went unchallenged for so long. Do you have any insight on that matter?
I think that I would frame your question a bit differently. I think that there have been a number of economists who have thought about and challenged the conventional wisdom over the years. The real question to me is why this stuff hasn't permeated more into the textbooks. A think a case could be made that some of this stuff might be a little too in-depth for an introductory course, but that doesn't explain why it hasn't permeated more advanced courses.
Great essay that sheds some light on a seldom-discussed topic! We should tax externalities when we can do so with reasonable effectiveness. We should not allow the perfect be the enemy of the good. When it comes to carbon taxation, for instance, it is probably best, as I outlined at Risk & Progress, to tax upstream fossil fuel consumption rather then downstream usage. To make this even more targeted, we could except taxation for non-combustion uses from taxation. It's not perfect, but it's better than the status quo.
"The villages near the communal forests created rules that dictated which trees could be cut down, when they could be cut down, and how people would be punished if they violated these rules."
and
"Places like schools, hospitals, and workplaces have incentives to come up with ways to mitigate the spread of infectious diseases."
How any of these is really different from the government-imposed rules?