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Arthur Cecil Pigou: 2 ideas worth knowing

2 ideas from Arthur Cecil Pigou, each explained in a minute and credited to the original work. Free on Savvy.

• Two people can pay wildly different prices for the identical seat on the identical flight

  Price discrimination is selling the same good to different customers at different prices based on how much each is willing to pay, not on any difference in cost. Economist Arthur P…

  — Arthur Cecil Pigou, The Economics of Welfare

• A factory's pollution costs its neighbours money — unless it's taxed for exactly that cost

  Arthur Pigou argued in 1920 that when an activity harms people who aren't party to the transaction, a tax equal to that hidden cost forces the price to reflect the true damage. Car…

  — Arthur Cecil Pigou, The Economics of Welfare

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