Beyond Pigou: externalities and civil society in the supply–demand framework

The extent of voluntary cooperation in the presence of externalities is shown as an equilibrium outcome in the supply and demand framework. The analysis uses familiar ingredients to provide a new way of understanding the results of the extensive literature beginning with Buchanan, Coase, Ostrom, Sha...

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Bibliographic Details
Published in:Public choice 2023-07, Vol.196 (1-2), p.1-18
Main Author: Mulligan, Casey B.
Format: Article
Language:English
Subjects:
Civil society
Consumers
Consumption
Cooperation
Costs
Discounts
Economics
Economics and Finance
Efficiency
Energy policy
Equilibrium
Excise taxes
Externality
Forest management
Forestry
Frame analysis
Game theory
Infectious diseases
Political Science
Prices
Profits
Public Finance
Subsidies
Supply & demand
Taxation
Workplaces
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Summary:The extent of voluntary cooperation in the presence of externalities is shown as an equilibrium outcome in the supply and demand framework. The analysis uses familiar ingredients to provide a new way of understanding the results of the extensive literature beginning with Buchanan, Coase, Ostrom, Shapley, Telser, Tullock, and Williamson showing that a Pigouvian tax is not the only alternative to independently acting individuals who are coordinated merely through distorted market prices. Voluntary cooperation transforms the character of the costs resulting from externalities and may have a far different incidence than Pigouvian taxes and subsidies do. The paper discusses applications including forest management, volume discounts, residential associations, energy policy, the scope of planning of household activities, and the role of workplaces in preventing infectious disease.
ISSN:0048-5829
1573-7101
DOI:10.1007/s11127-023-01064-x