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S E16: Externalities - The Full Cost of the Choices we make

Think Like An Economist

CHAPTER

Carbon Taxes Are a Good Way to Reduce Carbon Pollution

In general, the idea of pricing negative externalities is that we want to harness market forces. We get some of this with capin trade, but i prefer carbon taxes. When we tax something, we end up with less of it. That also means that it's a really good way for the government to raise money. Governments need to raise money, so if they tax externalities, they don'l have to tax other things so muchso externality seem to mean that the market doesn't always get us to the rightout.

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