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Paying for PollutionWhy a Carbon Tax is Good for America$
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Gilbert E. Metcalf

Print publication date: 2019

Print ISBN-13: 9780190694197

Published to Oxford Scholarship Online: January 2019

DOI: 10.1093/oso/9780190694197.001.0001

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Why Do Economists Like a Carbon Tax?

Why Do Economists Like a Carbon Tax?

(p.35) Chapter 3 Why Do Economists Like a Carbon Tax?
Paying for Pollution

Gilbert E. Metcalf

Oxford University Press

In non-technical language, the chapter explains why economists favor putting a price on pollution as the least expensive way to cut pollution to its socially optimal level. Using a pollution example from nineteenth-century British law made famous by the Chicago economist Ronald Coase, the chapter lays out the principles for good environmental policy and shows how a carbon tax fits with those principles. It introduces Arthur C. Pigou, an early twentieth-century economist who saw that a tax on pollution could use the power of the market to solve the pollution problem. It then demonstrates that carbon taxes in British Columbia and Sweden have not harmed their economies but have helped reduce carbon pollution.

Keywords:   Coase Theorem, Pigou, externality, pollution, British Columbia, Sweden

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