Protecting Goods by Taxing “Bads”

The production of “bads” is nearly as old as man and most certainly predates the market economy: it is believed that some species of large North American mammals were exterminated by nomadic hunters who corralled and killed large herds, depleting the hunt for later generations. “Bads”—or in economic terms, negative externalities—are an undesirable by-product of either the production or consumption of goods.