Arthur C. Pigou (economist)

Arthur C. Pigou was a British economist known for his work on how markets sometimes fail to account for external effects, termed "externalities." He argued that government intervention, such as taxes or subsidies, can help correct these market failures to achieve social efficiency. For example, a factory emitting pollution might be taxed to reflect the environmental damage, encouraging cleaner practices. Pigou’s ideas laid the foundation for modern environmental economics and policies aimed at balancing economic activity with social and environmental well-being.