Prices are the most efficient known mechanism for aggregating dispersed information. Hayek's point (1945): no central planner can know what millions of people know about local conditions, needs, and constraints. Prices do this automatically.

The corollary: when prices are distorted (price controls, subsidies, externalities not priced in), information is lost. Economic actors make decisions based on false signals.

Climate change is an externality problem: carbon isn't priced, so the market sends incorrect signals about the cost of carbon-intensive activities. The price mechanism isn't broken — it's just missing a variable.

Related: [[coordination-problems]], [[@sara/carbon-pricing]]