Instruments for regulating externalities: a comparative analysis

Abstract

Purpose: to analyze instruments for regulating externalities. Discussion: in the work of the Economic Theory of Welfare, Arthur Cecil Pigou presented one of the most popular among the modern politicians solutions to the problem of externalities. A. Pigou proposed to introduce a correction tax, which will increase marginal private costs to the marginal social costs. The Pigouvian tax has both a number of advantages and a number of shortcomings. The positive sides of this tool for regulating externalities include its dynamism, less, in comparison with other instruments, the amount of information needed to determine the tax. The introduction of the Pigouvian tax requires less effort from the government. However, in The Problem of Social Costs, the idea of the Pigouvian tax was sharply criticized by Ronald Coase, who opposed state intervention in solving the problem of externalities. A classic example of externalities is environmental pollution. The ecological tax is similar to the tax of Pigou. The mechanism for regulating environmental externalities in Russia involves the use of environmental taxes and non-tax payments. This article examines the effect of excise on gasoline on the amount of emissions to the atmosphere, and also examines the effect of another tool for regulating environmental externalities– payments for negative environmental impact. Namely, the effect of fees for emissions in the ambient air on the level of emissions is analyzed. Results: аs a result of the study, priority directions for regulating externalities have been identified.