Ramsey, Pigou, and a Consumption Externality

Pigou Meets Ramsey: Gender-Based Taxation with Non-Cooperative Couples

This paper explores the implications of gender-based income taxation in a noncooperative model of household behavior. In a first step, we show how gender-based taxes can act as Pigou taxes and correct the externality induced by a non-cooperative household equilibrium. We find that the first-best Pigou tax rules are solely determined by spouses’ relative marginal rates of substitution between th...

The core disagreement between Pigou, the profession, and Coase in the analyses of the externality question

The source of disagreement between Pigou, the profession, and Coase in regard to the externalities is thought to be transaction cost. Coase shows that the traditional prescription for remedying externality problems can be wrong if transaction cost is positive. But Pigou did recognize that positive transaction cost played a role in creating externality problems even though the profession later f...

Consumption and production waste: another externality of tobacco use.

OBJECTIVE To describe the waste produced by and environmental implications of individual cigarette consumption (filter tips, packages, and cartons) and tobacco manufacturing. STUDY SELECTION All available articles and reports published since 1970 related to cigarette consumption and production waste were reviewed. DATA SOURCES Global cigarette consumption data were used to estimate cigarett...

Evaluating Health Care Externality Costs Generated by Risky Consumption Goods

We present an overlapping-generations (OLG) macroeconomic model that applies a behavioral interpretation of preferences for goods that generate health risks. In this paper proneness to poor health is viewed as a cognitive miscalculation by economic agents between their expected health state over various consumption bundles and the actual health care they require for their health outcome. To mod...

A Differential Oligopoly Game with Sticky Prices and Environmental Externality