How does a Pigouvian tax works to solve the externality problem?

Question

15 Sep 2020

Answer :

Word Count : 302

A Pigouvian tax is a policy tool used in economics to address the issue of externalities, which occur when the actions of individuals or firms have spillover effects on third parties who are not directly involved in the transaction. Externalities can be positive (beneficial) or negative (harmful). In the case of negative externalities, such as pollution, the Pigouvian tax aims ________ ____ __________ _____ ___ ____ _________ ______ ____ _______ _______ ____.
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