Arthur Pigou was pretty much the founder of welfare economics and it is from him that we get the idea of Pigou taxation (you can see that the branding company had to work overtime there, can't you?). The essentials of which are that where there is an externality we should either tax or subsidise it. By definition, externalities are not things contained within market prices. Thus if there is a negative externality (that is, a cost which is carried by someone not included in the market price) then