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Arthur Cecil Pigou: externalities and the answer to climate change

Prices contain an immeasurable amount of information. They are the sum of an entire population’s private preferences and an indispensable signal to achieve an efficient allocation of resources. But what about the information they don’t include? Taylor Nugent examines the work of Author Pigou on externalities, and concludes that his eponymous tax is the best way to make prices reflect the costs of climate change.
This article first appeared in Short Supply 2016 – check out the full magazine via the Short Supply tab at the top of this page!