Thanks to David Colander for helpful comments.
He is right, of course, that it is Frank and not Charles Ramsey. Charles
Ramsey is my neighbor, with whom I have recent issues of negative external
diseconomies from the bees that service my trees, and, he believes, might
shorten his lifespan. He was on my subconscious - hence the Freudian slip.
Whether to call Dr. Freud or Dr. Coase ... well, enough of that.
I'm not sure we should be very grateful to Mirrlees for making things more
complicated, just when we seem to have a handle on them. Working in rarefied
abstractions one may dream up endless complications of pure theory. I follow
the views of Mirrlees' co-Laureate, Bill Vickrey, on two specific, applied,
and topical matters.
1. It makes sense to tax autos etc. to subsidize marginal-cost pricing for
mass transit. Here the supply curve is better than vertical, it's negatively
sloped.
2. It makes sense to tax benefited lands to permit of marginal-cost pricing
for kinds of infrastructure like distributive networks (roads, power, gas,
postal delivery service, etc.) so long as A, The capital in place has excess
capacity, or B, There is room for replacement capital of greater capacity
and lower Average Cost per unit of service.
I wonder if Mirrlees' complexities would render us unable to go that far?
At some point we must arrive at decisions.
Mason Gaffney
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