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''"At the same time, pecuniary externalities have significant welfare consequences when there are distortions in the economy (e.g., from monopolies, technological externalities, or distorting taxes). An important determinant of the optimal tax on one commodity is for instance a calculation of its indirect effect on government revenue raised from other taxes. It has not, however, been widely recognized that the distortions that arise in economies in which there is imperfect information and incomplete markets for practical purposes, all economies result in there being real welfare consequences of what would otherwise be viewed as purely pecuniary effects. As a result, economies in which there are incomplete markets and imperfect information are not, in general, constrained Pareto efficient. There exist government interventions (e.g., taxes and subsidies) that can make everyone better off. Moreover, the distortions that arise from imperfect information or incomplete markets often look analytically like externalities of the familiar technological sort, and viewing them in this way helps identify the welfare consequences of government interventions."''


 * &mdash;Joseph Stiglitz, Externalities in economies with imperfect information and incomplete markets, 1986

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