In order to calculate and to manage this climate rent appropriately, common policy instruments like Pigouvian taxes or emissions trading presume perfect information about resource demand, extraction costs, reserve sizes, and damages for the entire planning horizon. To reduce these informational ...
The main purpose of Pigouvian taxes is to oppose market inefficiencies by increasing the marginal private cost by the amount generated by the negative externality. In such a case, the final cost (original cost plus tax) will reflect the full social cost of theeconomic activity. Subsequently, the...
Nominal GDP does not include the full cost of production. It neglects external costs like air and water pollution, nuclear waste, and deforestation. These costs are created by production but are borne by society at large. The only way to include those costs is through aPigouvian taxsuch as ...