Pigou Tax and Plastic Bags

In a recent post Marron has described what happened in DC when the applied a tax on plastic bags. He refers to a WSJ article recounting what has happened. Simply what happened was not a surprise but not exactly what DC expected.

You see, what Pigou taxes can do it get people to use alternatives, by raising the cost or by merely applying a cost to something, some behavior which is to be changed because it has some negative externality. So if you want people to stop using plastic bags, tax them, and people have alternatives, paper, no bag, their own bag, or paying the tax,

This is unlike the proposal of my favorite economist at Harvard who espouses this for gasoline and drivers. You see, there is no alternative, the tax just makes it more costly and the taxpayer pays and the Government gets more money to waste.

So hopefully someone at the famous institution may see this obvious difference and apply. Plastic bags yes, calories yes, gasoline is a no.