He became intrigued by welfare economics, which examines the overall benefit to society that comes from all the decisions made: those that individuals make about buying, selling and working, and those that firms make about production and employment.
Pigou's most enduring contribution was The Economics of Welfare, 1920, in which he introduced the concept of externality and the idea that externality problems could be corrected by the imposition of Pigovian taxes (also spelled "Pigouvian tax"). In The Economics of Welfare (initially called Wealth and Welfare), Pigou developed Marshall’s concept of externality, which is a cost imposed or benefit conferred on others that is not accounted for by the person who creates these costs or benefits. Pigou argued that negative externalities (costs imposed) should be offset by a tax, while positive externalities should be offset by a subsidy.
https://en.m.wikipedia.org/wiki/Arthur_Cecil_Pigou#Early_life_and_education
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