Definition
A Pigovian tax is imposed on activities that create negative externalities.
Why It Matters
It encourages socially optimal behavior by internalizing external costs.
Example
A carbon tax on pollution.
Malone Global University
Malone Global University
Economics Glossary – Malone Global University
A Pigovian tax is imposed on activities that create negative externalities.
It encourages socially optimal behavior by internalizing external costs.
A carbon tax on pollution.