QTHE DISTRIBUTIONAL ASPECTS OF A TAX ON EXTERNALITIES

Opportunity Act of 1964. Abstrq.ct This paper studies the distributional effects of taxes and subsidies on consumption externalities. It is well known that a Pigouvian excise tax need be imposed on external diseconomies if the competitive equilibrium is to be Pareto-optimal. The focus of this paper is an examination of whether these taxes enhance a Pareto-improvement with respect to the pretax equilibrium