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Now we will assume that someone has decided to construct a new building near to factory and

That as a result value of damage annually caused by a smoke reaches 100 Dollars the Builder can count on that the owner of factory will establish

Can avoid the tax in 100 Those dollars who will be under construction near to factory

After that, will not suffer from any damage as it is more a than smoke

No. But the situation can and not to be optimum. The builder could choose another

Place, so satisfactory and without any smoke, all for Additional 40 dollars a year. Besides value of manufacture would be more

On 50 dollars a year if there were no taxes and the factory continued to smoke.

I also have declared that if "it is necessary to force the owner of factory to payment

The tax at a rate of the caused damage followed found the double Tax system and to force inhabitants of area to payment of the tax equal To additional costs of the owner of factory... To avoid causing Damage "p. 151 - 151, The Problem of Social Cost. It is easy to show it.

Additional costs of the owner of factory are equal in our example 90 dollars in

Year. We will assume that on inhabitants it the tax in 90 dollars In this case is imposed

The builder will prefer to build in other place, to incur because of it Additional costs in 40 dollars but to avoid the tax in 90 dollars, and in Result the factory will let out still a smoke and value of manufacture Will be maximum.

The conclusion would be erroneous that I supported double system of taxes or in general

For use of tax system for this purpose. I have simply noticed that if

To impose the tax based at size of a damage it is desirable to impose with it

The tax and what presence attracts costs on the firm generating

Harmful influences. But, as I already spoke in article "the Problem of the social

Costs ", any tax system abounds with difficulties, and desirable can To appear unattainable. - which in detail assorted my sights in the article, asserted that Its main objective - "to show that if to start with own preconditions

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