Talk:Pigovian tax

Negative Pigovian tax

Would a minimum wage be an example of a Negative Pigovian tax? DOR (HK) (talk) 02:52, 23 October 2009 (UTC)

What do you mean by "Negative Pigovian tax"? There's such a thing as a Pigovian subsidy for positive externalities, but that's not what minimum wage is, since the government doesn't pay for the increase in wages. Minimum wage is a "Price Floor". —Preceding unsigned comment added by 168.16.132.59 (talk) 22:10, 3 May 2010 (UTC)

A Pigovian subsidy for labor could replace a minimum wage. At $10,830 for single person, and 2080 hours (40 hours per week x 52 weeks per year), that would be about $5.21/hr. Of course, that would require original research -- and a heck of a lot of tax dollars. :) —Preceding unsigned comment added by 68.186.116.6 (talk) 16:00, 12 January 2011 (UTC)

It's not really clear to me what a "pigovian subsidy for labor" would be -- that's more like redistribution than anything about an externality. Austinecon (talk) 19:07, 14 July 2011 (UTC)

Higher employment tends to reduce negative externalities like crime, a benefit that is external to the economic interaction between employer and employed. If the current workforce is at less than full employment -- and it would be hard to find anyone who claims otherwise -- it may be more economically efficient for taxpayers to subsidize employment than pay for things like additional courts and prisons, thus fitting the definition of a Pigovian subsidy. — Preceding unsigned comment added by 184.100.30.198 (talk) 21:22, 10 September 2011 (UTC)

There's not much empirical evidence that crime is countercyclical (that it increases during recessions), and some that goes the other way. And would a (necessarily broad-based) labor subsidy be literally less costly than other methods of reducing crime? There might be an argument for such subsidies (as I suggested above), but I'm not sure this is the strongest one. In any event, even assuming that's all the case, we generally think of Pigovian taxes & subsidies as direct taxes & subsidies on the good causing the externality. Though this may be an overly pedantic point. Austinecon (talk) 14:19, 21 September 2011 (UTC)

Pincites to Pigou

Author of article needs to provide more clarity for assertions based on Pigou's The Economics of Welfare. Broad cites to a 800+ page text are not helpful or authoritative. — Preceding unsigned comment added by 128.205.132.193 (talk) 19:32, 13 March 2012 (UTC)

"Pigouvian" is the preferred spelling.

Google smackdown 2012 0501:

Pigouvian tax - About 175,000 results

Pigovian tax - About 96,600 results --?

Google Books smackdown 2013-06-13:

Pigouvian tax - About 13,800 results

Pigovian tax - About 9,400 results

And, it seems to me that a tax named after Pigou should include the 'u'. Changing the article content. If it sticks, we can move the page.--Elvey (talk) 18:51, 13 June 2013 (UTC)

Google 2018:

"Pigouvian tax" - About 99,000 results

"Pigovian tax" - About 35,500 results

The use of "Pigovian" seems like a case of over-americanisation.

Incomprehensible

The topic paragraph of this article is pretty much incomprehensible. Full of jargon. What are "externalities," for example. Please rewrite!

192.249.47.201 (talk) 18:50, 15 August 2012 (UTC)

Did you read the linked article "externality" which explains the term? Mindmatrix 20:46, 15 August 2012 (UTC)

Do we have to read every article in order to understand any article? I'm going to put something in. OsamaBinLogin (talk) 16:49, 19 October 2013 (UTC)

Neutral tone?

Does this page maintain a neutral tone throughout? Particularly the subheading regarding political obstacles? 71.59.147.83 (talk) 01:09, 22 March 2013 (UTC)

pronunciation

do you really say "pig-ovian"? At first I thought the word derived from the word 'pig', as in a barnyard animal. OK, "Arthur Pigou". Did he really survive grammar school with a last name pronounced "pig-oo"? Or is it more like pizhou? OsamaBinLogin (talk) 16:49, 19 October 2013 (UTC)

Link to Coase theorem

In http://en.wikipedia.org/wiki/Pigovian_tax#No_intervention_.28direct_negotiation_between_parties.29 there should be a link to http://en.wikipedia.org/wiki/Coase_theorem — Preceding unsigned comment added by 181.29.131.116 (talk) 01:58, 13 July 2014 (UTC)

Sumptuary tax

Sumptuary tax redirects here, yet the term does not appear in the text. 216.8.172.35 (talk) 21:18, 26 November 2014 (UTC)

Dr. Franckx's comment on this article

Dr. Franckx has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I think the main issue with this page is that it is heavily biased towards some rather specialized or ideologically sensitive issues, and omits a discussion of some basic problems.

I think the article is right to discuss the measurement problem (which is of very high practical relevance) and the issues of second-best taxation and of tax interactions (although, again, there is too much focus on specific papers). There is no discussion at all of Pigovian taxation when other market imperfections such as monopoly power are present. The fundamental asymmetry between taxing pollution and subsidizing pollution reduction (which is discussed at length in Baumol and Oates class handbook) is missing completely.

A comparison between Pigouvian taxes and cap-and-trade probably requires a Wikipedia page in its own right. However, the political advantage of grandfathered permits is a very important argument in favour of this instrument (which is one of the key reasons why the European Union uses cap-and-trade for greenhouse gasses). The fundamental asymmetry between taxes and tradable permits when abatement costs are unknown, and which has been identified first by Weitzman, should also be included, or at least referred to.

The text says that Pigovian taxes are commonly used - after all these years in the field, I would be interested in seeing a "real" tax in action. In reality, environmental taxes are often based on easily measurable inputs to the production process (such as fuels) rather than on emissions.

The discussion of Coase is, in my opinion, completely wrong, and may be ideologically inspired. The main point made by Coase was that economists should study the transaction costs involved in any arrangement. He never wrote that negotiated solutions would always be superior, he only pointed to their possibility and used practical examples to show that common law, could in some instances substitute for regulation. For almost all environmental problems that are currently relevant (such as climate change or biodiversity loss), the Coasian bargaining approach is totally unfeasible. It is quite telling that the examples given in the article barely belong to what we would nowadays consider to be 'environmental' problems. It would do justice to the work of Coase if this specific section would be completely re-written by someone with a deeper knowledge of the man's work. It should also discuss the issue of the allocation of property rights, which was discussed at length in Coase, and is really the fundamental issue at stake.

Another basic issue that should be discussed is the comparison between Pigouvian taxes and command-and-control approaches to regulating pollution. The discussion should at least mention that (a) in a first world setting, with no distortionary taxation, Pigouvian taxes are more efficient than command-and-control (b) despite their higher efficiency, Pigouvian taxes lead to higher costs for firms because the taxes are a high cost to the firm (but are no social cost because they are just a transfer from the firms to the government if taxation is not distortionary). Again, all this is discussed in the classical textbook of Baumol and Oates.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Franckx has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Laurent Franckx & Alessio DAmato, Isabelle Brose & Isabelle Brose, 2004. "Multi Pollutant Yardstick Schemes as Environmental Policy Tools," Energy, Transport and Environment Working Papers Series ete0416, Katholieke Universiteit Leuven, Centrum voor Economische Studien, Energy, Transport and Environment.

ExpertIdeasBot (talk) 02:42, 28 May 2016 (UTC)

Are there no papers discussing the substitution effect?

The only focus seems to be on how a higher price cuts output by implied lower demand.

But the real action of a pigovian tax is in the substitution of cleaner alternatives.

Coal costs 1 while natural gas costs 1.4 for the same resulting output but at half the pollution, so a tax of 1 per unit of pollution will make coal cost 2 while natural gas costs 1.9. Not only does the higher price cut demand per unit of energy, it also cuts demand for coal while increasing demand for gas. But if wind costs 1.8 with no pollution, then it will cut demand for gas which can quickly track varying wind production, so coal demand is cut while gas production capacity is increased but gas burned is cut if wind is available. Coal demand is eliminated even though wind and natural gas cost more without the pollution tax.

Currently, coal costs 1 while natural gas in areas of high supply, meaning pipelines, gas costs .8 while in areas lacking pipeline capacity, gas costs 1.2, except natural gas generation is faster to build and more versatile and thus has lower capital cost than coal (or nuke, hydro, wind). That's why gas gained and coal fell even before gas became cheaper than coal in some markets - price is more for a given transaction, but capital costs must be spread over many transactions.

Remember, economists must use both hands, on one hand ..., but on the other hand .... Mulp (talk) 03:14, 23 October 2016 (UTC)

Reciprocal cost discussion is dubious

The point of strict regulatory isn't efficiency per se, it is determining a safe level of pollution and enforcing it uniformly. The healthy level of smoke is fixed, independent of the total damage it does to neighbors. Note that excess pollution isn't only a nuisance; it can be lethal. In such case, the aggrieved party can't collect a fee because he is dead.

The real issue isn't the number of neighbors, it's the number of factories. With one factory, only limited pollution controls are necessary. (The 1948 Donora smog event proved even one factory is enough to be fatal.) Assertions of inefficiency when regulations are applied to total industrial pollution are not well founded by the arguments presented here. The solution isn't to limit the total number of factories, it's to improve the pollution controls on the individual ones. Yes, this decreases the total market in number of goods, though it increases the market in pollution control. — Preceding unsigned comment added by 67.100.123.107 (talk) 15:38, 29 March 2017 (UTC)

spending the tax receipts on mitigation?

If manufacturing has an associated negative externality of pollution, and so manufacturing is taxed to include the cost of the pollution as a cost of manufacturing to get the market price of the manufactured goods where it belongs... but the government then spends the tax receipts on education: yes, you've mitigated the pollution level somewhat, but you still have a level of pollution, pollution that is now an economic byproduct of education. You need to spend the tax receipts to clean up the pollution or you have not corrected the externality. Wish I had a citation for you, but this is how it works. 98.7.201.234 (talk) 16:07, 15 November 2019 (UTC)

Coase Theorem

"Economist Ronald Coase argued that individuals can come to an agreement with an efficient result without the need for a third party when transaction costs are low."

This section seems to support a misreading of The Problem of Social Cost. The point of the paper is that because transaction costs are large enough and property rights are ambiguous that you don't see this in practice.I'd maybe rewrite this as "Economist Ronald Coase argued that when transaction costs are low individuals can come to an agreement with an efficient result without the need for a third party."to emphasize this point better. A more extensive rewrite might be warranted.--TheWhiteGuar (talk) 02:10, 3 December 2019 (UTC)

Vacant property (or empty homes) tax

To call a vacant property (or empty homes) tax can for Pigouvian requires some more justification. — Preceding unsigned comment added by Northwind Arrow (talk • contribs) 11:07, 26 March 2020 (UTC)