Going back to the work of noted British economist Arthur Pigou
, economic experts have advocated subsidizing activities with positive spillovers and taxing those with negative spillovers.
The father of welfare economics, Arthur Pigou
, thought that the state would somehow protect the social contract's absent partners, but that view was hopelessly idealistic.
By that year, Marshall had already been retired as Professor of Economics for four years, and Robertson's economics teachers were Arthur Pigou
and John Maynard Keynes.
Correcting for externalities, such as pollution, by taxing them (as first taught by Arthur Pigou
and widely endorsed by mainstream economists) is therefore often inferior to allowing parties to work out trades that will maximize joint product when such trades are feasible.