While reading this article one paragraph struck me:
The idea is simple. Sometimes markets produce negative impacts that are not accounted for in market prices. The market participants who produce the impacts do not pay for them; society absorbs the costs. (Air pollution is a good example.) These “externalities,” costs external to markets, are considered a form of market failure.
Ĩn the case of environmental costs many solutions have arisen, the most famous of them being carbon taxes and the cap and trade system. However developing them was the result of results tailored for industries polluting the atmosphere. In a more general setting, can you improve markets such that these externalities are taken into account without the need for ad hoc fixes such as specially design taxes and other mechanisms?