This phenomenon is ominous yet foreseeable. Allied with identity groups, elitists claim authority to filter public discourse, while populist movements seek to dismantle the protections that have allowed them to attain public support. One of liberalism's most notable political achievements, the right to free expression, now finds itself caught in a political crossfire. The Coase Theorem is seen to have less relevance than is typically supposed. This implies that Pigouvian taxes should generally be larger than currently thought and that command and control regulations are too lax. The claim to be defended here is that non-excludable goods-particularly environmental goods-are undervalued by the methods currently employed by economists. I add to the controversy here by describing a previously unexplored relationship between externalities, public goods, and property rights. Because of the stringency of the conditions underlying the Coase Theorem, however, controversy about its importance continues to this day. Under the conditions underlying the Coase Theorem, externalities would be self-internalizing without need for Pigouvian taxes, and public goods would also be provided optimally by the private sector. However, Coase (1960) argued that, if transactions costs are sufficiently small and a legal system exists to define/enforce property rights, government intervention is unnecessary. Both Pigou and Samuelson believed that non-excludability implied that government intervention was required for proper resource allocation. how much air or water quality is optimal). which species do we save) and how much to provide (e.g. Samuelson (1954) laid out the conditions for optimal pure public goods provision, but noted that free-riding (the “demand revelation” problem) was likely to pose great difficulties in knowing what public goods to provide (e.g. Pigou (1920) advocated for taxes, set equal to marginal damages, on goods produced and consumed that involve negative externalities.
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