The biggest problem with market prices is externalities, such as pollution.
Some other serious problems with market prices are rent-seeking endeavors and arms races in signaling behavior.
I think it’s taxes which unlike pollution causes most prices to overestimate the marginal social cost of goods.
Hence the Pigouvian tax in which the taxes and the negative externalities cancel should each other out.
Or Coasian bargaining, which also may or may not work in practice.
The biggest problem with market prices is externalities, such as pollution.
Some other serious problems with market prices are rent-seeking endeavors and arms races in signaling behavior.
I think it’s taxes which unlike pollution causes most prices to overestimate the marginal social cost of goods.
Hence the Pigouvian tax in which the taxes and the negative externalities cancel should each other out.
Or Coasian bargaining, which also may or may not work in practice.