May 3, 2010

Hey, That's My Idea!

I am not complaining, perhaps Professor Mankiw's reader has improved it. Besides, I clearly put it in the public domain in 2003.

I wrote an essay, on my old Berkeley Square Blog, about "A Free Market Solution to SPAM."

I set up my mailbox to accept only mail from people in my address book and from “Joe’s Trusted Relay Service.”

Now, all my friends can email me because they are whitelisted. Somebody who wants to reach me can pay Joe’s the nickel or dime he charges. A business can contract with Joe’s to send to real email addresses and get through. If Joe’s sends me too much junk I don’t like, I will stop accepting from him and will sign up with Fred’s. Fred charges a little more, so I get less junk. Market forces now enable senders and receivers to control SPAM volume. And the first to drop out will be the shysters and purveyors of illegal products.

I also get the chance to pay a dime to write a popular journalist or blogger and have more confidence that my message will be received. Maybe a magazine will whitelist subscribers and bloggers will whitelist those who donate. I’ve created a new business, a solution to an intractable problem, and the new, international currency of whitelisted email.

"A. Blog Reader" (funny name, isn't it?) uses the same idea for a ---wait for it -- Pigouvian Tax.
I think an excellent Pigouvian tax would be a tax on emails. Many emails involve a negative externality (I don't really want to receive them) and almost all the ones I really want to get are worth much more than a penny or so to the sender. So a penny tax (say) on email would probably generate large amounts of revenue, mitigate an important negative externality, and have minimal inefficient disincentives. Since email servers are necessarily centralized and networked and all email senders are ipso facto connected to an ISP who is charging them for access the transactions costs and evasion problems seem low.

'Course, I still prefer my free market idea to his government revenue stream, but Mankiw improves both ideas with a simple suggestion:
Even better, if possible, might be to have the recipient set the price! I would happily raise mine to a dime, and let the government use the revenue to fix the long-term fiscal imbalance or cut other more distortionary taxes.

Yeah Pigouvian Schmagoovian and all, but the receiver's setting the price is a good suggestion.

Shameless Self Promotion Posted by John Kranz at May 3, 2010 11:18 AM
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