An economist proposed taxing pollution exactly as much as the damage it causes

Arthur Pigou noticed that factories dumping smoke impose real costs on their neighbours that never show up in the factory's own accounts. His solution — now called a Pigouvian tax — is to price the externality directly into the product, so the polluter, not the public, pays for the harm.

— Arthur C. Pigou, The Economics of Welfare — Macmillan, 1920
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