It is feasible in some competitive equilibria with externalities to shift some externality costs among different agents in the economy. However, simply shifting costs will not, in general, result in efficient allocation decisions by all agents, since the magnitude of externality costs depends on...

It is a natural presumption that there should be less distorting taxation when there are more decisions based on the prices distorted by taxation. This note shows the need for an additional assumption in order to reach the conclusion. We consider a competitive model with one consumption good,...