A Pigouvian tax (also spelled Pigovian tax) is a tax on a market activity that generates negative externalities, that is, costs incurred by third parties. It imposes costs corresponding with the externalities, internalizing those costs to improve Pareto efficiency.
A Pigouvian tax (also spelled Pigovian tax) is a tax on a market activity that generates negative externalities, that is, costs incurred by third parties. It imposes costs corresponding with the externalities, internalizing those costs to improve Pareto efficiency.
Source: Wikipedia "Pigouvian tax" · CC BY-SA 4.0
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