No internal link — plan spurs innovation in ENERGY tech NOT government cyber defense.

Markets are very good at matching buyers and sellers: for a transaction to happen, it has to be beneficial to both parties, and ergo, everyone ends up better off from the transaction. Some behaviors or transactions, however, have social costs the two parties directly involved do not bear. As an example, say a factory makes detergent, and the byproducts pollute the local river. The detergent manufacturer and the detergent customers both benefit from the detergent’s sale. The detergent business has other costs borne not by the manufacturer or the customer, but by the town’s residents, who now face elevated health risks due to the pollution. Without some form of policy intervention, the price of the detergent will not reflect the health risks imposed on the community—as a result, people will produce and use more of the detergent than is socially optimal. A Pigouvian tax (named for economist Arthur Pigou, credited with devising the idea) is a tax on negative externalities, namely the social costs of a particular economic activity that are not borne by the buyer and the seller. The tax forces the buyer and seller to “internalize” the externalities.[2] Producers are incentivized to reduce the social harms related to the particular product, while consumers are incentivized to consume less of it. If the tax reflects the social costs associated with a good, then the market for the good becomes socially optimal. In this way, the Pigouvian tax is perhaps the only tax which leads to a better market outcome. Some taxes, like taxes on consumption, might be less distortive or harmful to economic growth than others (such as taxes on investment), but consumption taxes do not correct a market inefficiency. Some critics of a carbon tax argue it is not a real solution to correct the inefficiencies created by carbon emissions; instead, they say the only real solution to climate change is innovation, with a tax on carbon emissions being a distraction. While it is true that innovation is a major reason why carbon emissions have not grown in the United States over the past decade, carbon taxes would kick innovation into a higher gear. By raising the price of carbon emissions, a carbon tax raises the return to new developments in energy-saving or low-carbon technologies. In a landmark paper, economist David Popp found high energy prices have a strong impact on innovations in energy-efficient technology