Result in the increase in the production and consumption of a private good to the socially optimal level.
Resolve the economic problem created by a positive externality.
Result in a decrease in the production and consumption of a private good to the socially optimal level.
Increase the socially optimal level of production.
1 answer
Pigouvian taxes result in a decrease in the production and consumption of a private good to the socially optimal level.
These taxes are designed to correct the negative externalities associated with the production or consumption of goods, thereby aligning private costs with social costs and promoting a more efficient allocation of resources.
