Corpus ID: 236428643

Beyond Pigouvian Taxes: A Worst Case Analysis

  title={Beyond Pigouvian Taxes: A Worst Case Analysis},
  author={Moshe Babaioff and Ruty Mundel and Noam Nisan},
In the early 20 century, Pigou observed that imposing a marginal cost tax on the usage of a public good induces a socially efficient level of use as an equilibrium. Unfortunately, such a “Pigouvian” tax may also induce other, socially inefficient, equilibria. We observe that this social inefficiency may be unbounded, and study whether alternative tax structures may lead to milder losses in the worst case, i.e. to a lower price of anarchy. We show that no tax structure leads to bounded losses in… Expand

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