Wednesday, June 19, 2013

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The store sells some creative products, including lanterns, art posters, purses and clothing, replica louis vuitton damier ebene canvas using the plastic canvas bags ubiquitous on the city's retail scene since the 1960s. Designed by Wong, the products are all handmade by recovering patients from the New Life Psychiatric Rehabilitation Association. The store is also staffed by former mental illness patients, while the proceeds from the sales go towards the association..

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Clearly the introduction of a tax is fraught with dangers from the law of unintended consequences. Even if we could correctly target the tax so that it did affect only plastic bags, how do be know we have got the level of the tax right? As economist Arthur Pigou first pointed out, it is rather difficult to get the tax to reduce consumption to the socially optimum level (a perfect Pigouvian tax), which is why it is so much easier to create a market where previously it was missing and allow the Coase Theorem to do the work for you. Unfortunately, since this is not possible in the case of plastic bags, it seems that we will have to make do with a tax.

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