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Comments on: There’s taxation and then there’s taxation http://www.tvhe.co.nz/2007/07/26/theres-taxation-and-then-theres-taxation/ The Visible Hand in Economics Mon, 16 Jun 2008 22:04:51 +0000 hourly 1 https://wordpress.org/?v=6.9.4 By: The value of value « The visible hand in economics http://www.tvhe.co.nz/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-68 Mon, 16 Jun 2008 22:04:51 +0000 http://tvhe.wordpress.com/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-68 […] Ultimately, the existence of asymmetric information, externalities, and monopolies do cause problems with the price signal – however in that case the question we have to ask is whether the government intervention involved in fixing the signal is worth it (does the social benefit exceed the cost) – this is a separate issue from the one given above, and is also an issue where economics do suggest intervention (ergo why economists such as rauparaha and myself suggest externality taxes). […]

]]> By: rauparaha http://www.tvhe.co.nz/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-67 Thu, 26 Jul 2007 09:57:06 +0000 http://tvhe.wordpress.com/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-67 Ha, are you trying to provoke me into rambling on about dynamic inconsistency and the quasi-hyperbolic discounting literature on smoking? Dunno how the readership of three would feel about that 😛

]]> By: Matt Nolan http://www.tvhe.co.nz/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-66 Wed, 25 Jul 2007 20:58:51 +0000 http://tvhe.wordpress.com/2007/07/26/theres-taxation-and-then-theres-taxation/#comment-66 I agree. From a political economy point of view there is another issue with externality taxes, and that is the fact that governments may use them as a revenue gathering device instead of to correct a market failure. In these cases they may over-tax (some use the example of cigarettes, even though I don’t think we agree 😉 ).

Still, I agree with you, as we are discussing the normative, ‘what should be done’ part of the issue. Keeping in mind the positivist ‘what will happen’ is important, but we need to be able to distinguish so we can give policy advice.

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